Daily v. White

Filing 13

MEMORANDUM OPINION. Signed by Senior Judge Norman K. Moon on February 19, 2021. (ca)

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UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF VIRGINIA

2/19/2021

LYNCHBURG DIVISION

RICHARD A. DAILY, Executor of the Estate
of ALICE M. WHITE, deceased,
Plaintiff,

CASE NO. 6:20-cv-00021
MEMORANDUM OPINION

v.
PAUL M. R. WHITE,

JUDGE NORMAN K. MOON
Defendant.

Plaintiff Richard A. Daily (“Richard”), executor of the estate of Alice M. White (“Alice”),
deceased, filed a complaint against Paul M. R. White (“Paul”) to recover for fourteen transactions
between Alice and Paul over more than three years. Dkt. 1. Richard alleges that the transactions
were loans and seeks to recover based on a breach of contract theory or, alternatively, a breach of
promissory note theory.
Paul filed a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6). Dkt. 4.
The Court will grant Paul’s motion with respect to the breach of promissory notes claim but deny
his motion with respect to the breach of contract claim.
I.

ALLEGED FACTUAL BACKGROUND

For the purposes of ruling on Paul’s motion to dismiss, the Court accepts as true the
following allegations set forth in the complaint and attached exhibits.
Alice died on January 29, 2019. Dkt. 1 ¶ 1. Alice and her late husband, Arthur, had four
biological children, including Alice W. Daily—Richard’s wife—and Paul. Id. ¶ 7–8. Richard
qualified as the executor of Alice’s estate on May 1, 2019. Id. ¶ 2.

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On February 2, 2009, Paul wrote Alice a letter titled “Re: Loan,” in which he requested a
$25,000 loan to support his business, himself, and his family. Id. ¶ 9; Dkt. 1-3. In part, the letter
read:
Dear Mom,
As of this date, we request a loan. This loan is to allow the survival and enhance
the success of White Technologies, Inc. and the families associated.
We plan to pay interest at ±1% per month . . . and we expect to begin paying this,
or returning principle [sic] and a few months only worth of interest soon [ . . . ] .
We expect that this loan will be short-term and hope to avoid a second amount.
[...]
We request a loan amount of $25,000 at this time, please. We are working to repay
immediately, but a second request may be necessary . . . remaining short term &
with interest. Thank you for your support.
Paul
Dkt. 1-3. The next day, Alice issued Paul a check for $25,000. Dkt. 1 ¶ 10; Dkt. 1-4.
Between February 3, 2009 and September 27, 2012, Alice loaned Paul a total of $435,000,
in fourteen separate transactions. Dkt. 1 ¶ 11. Although Alice made the first two advances—
totaling $45,000—from her personal checking account, she made the twelve subsequent
advances—totaling $390,000—from a line of credit that Alice opened with UBS Financial. Id. ¶
14–15. Alice pledged her stock investment portfolio at UBS Financial as collateral to secure the
advances from this line of credit. Id. ¶ 14. Alice paid UBS Financial $153,000 in interest on the
advances made from the line of credit. Id. ¶ 16.
On October 14, 2014, Alice sent Paul a letter detailing all fourteen loans and demanding
payment of the debt as he had previously agreed. Id. ¶ 17; Dkt. 1-5. On November 6 and 10, 2014,
Alice sent Paul emails requesting that he sign and date a statement in the October 14 letter
confirming his agreement to repay the debt. Dkt. 1 ¶ 18. Paul replied to Alice by email on
November 11, 2014. Id. ¶ 19. The email read, in relevant part:
All since the beginning of 2009, a year and a half since Dad had passed . . . when I
asked for a loan to sustain what we’d begun, I have answered you as I do now . . .

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I am certain that I will be able to pay you back, with interest! . . . I think I have
heard you in years past decline the interest . . . but, we would definitely never
consider that the economics & politics of inside this market and the world to
become so long and painful.
I repeat . . . I am certain that I will be able to pay you back! And as I have said, I
don’t know how long this will take but, the Company Dad and I started will flourish
again and the Company and I will pay you back!
Id. ¶ 19; Dkt. 1-6 (emphasis in original).
Alice’s will also references the loans to Paul:
As of the date of this Will, I have loaned Paul Four Hundred Eighty Thousand and
00/100 Dollars ($480,000.000) (the “Second Loan”) which Paul is obligated to pay
to me or to my Estate upon my death. Any total remaining balance due on the
Second Loan shall be allocated to and deducted from Paul’s . . . share of my
Residuary Estate . . . . The then outstanding balance of the Second Loan shall be
determined by my Trustee in good faith on the basis of my written records, bank
statements, checks or other applicable documents. The purpose of the foregoing
provisions of this paragraph . . . is to effect my intention that each of my children
be treated equally and that none of my other children . . . be penalized by virtue of
the Second Loan made from me to Paul.
Dkt. 1 ¶ 20; Dkt. 1-1 at 4. However, Alice’s estate does not have sufficient assets to account for
the debt Paul owes on the loans from his share of the estate. Dkt. 1 ¶ 21. In addition, upon Alice’s
death, UBS Financial debited Alice’s investment portfolio $330,380.57 in satisfaction of the
outstanding balance on her line of credit. Id. ¶ 22.
The outstanding principal on Alice’s loans to Paul is $435,000. Id. ¶ 23. At a one percent
interest rate, the principal and accrued interest together amount to $1,379,956. Id. ¶ 24.
Richard sued Paul for breach of contract, id. ¶¶ 26–33, or breach of promissory notes, id.
¶¶ 34–43. Richard alleges that Paul’s February 2, 2009 correspondence formed a written contract
when Alice issued him a $25,000 check the following day. Id. ¶ 27. Paul’s additional requests and
Alice’s subsequent loan advances to him supplemented the contract, which Paul acknowledged in
writing in his November 11, 2014 email. Id. ¶ 28. Alternatively, Richard alleges that certain emails

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that Paul sent acknowledging payments that Alice made to him were promissory notes. Id. ¶¶ 36–
39; see Dkts. 1-3 (“Note 1”), 1-7 (“Note 2”), 1-8 (“Note 3”), 1-9 (“Note 4”).
Note 1 is Paul’s loan request letter to Alice, dated February 2, 2009. Dkt. 1-3.
Note 2 is a February 1, 2010 email from Paul to Alice with the subject line “RE: Good
morning[!]” Dkt. 1-7. The email, after noting that “the investment is wise and will be paid back
with interest . . . maybe even faster than I think,” states:
Loans you’ve made: . . .
Feb. 2 / 09 . . . $25,000
Apr. 16 / 09 . . . $20,000
July 29 / 09 . . . $25,000
...
To be a “separate issue”:
Oct. 13 / 09 . . . $35,000
Nov. 9 / 09 . . . $33,500 Repayment with interest.
Nov. 10 / 09 . . . $2,000 Additional Repayment due to Bank error.
...
Dec. 21 / 09 . . . $35,000 Intending to repay from the outstanding Western Refin.
Invoice of $50,000, . . . expected to be late.
Current Request discussed Saturday 1/30.10 . . . $32,000.
I HAVE NOT YET COMPUTED THE INTERST [sic] THE ABOVE HAS
EARNED . . . to be included.
TOTAL (Including current request but, not including Interest) = $137,000.
In this span of a year, I will have borrowed this amount [ . . . . ]
I fully expect to resolve this as the year develops.
May I please contact Frank Clemente regarding the transfer we’ve done before?
Thank you very, p.
Id. (emphasis in original).
Note 3 is a May 13, 2010 email from Paul to Alice with the subject line “RE: Wire
information for May 13, 2010.” Dkt. 1-8. The email, after noting that a contractor’s “payment will
be here by July 1,” states:
. . . and this would be the time that we’d be able to return these funds to your account
with UBS.
That figure is $24,000.00. . . . Hoping to receive this wire transfer as early as this
afternoon as possible.

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Further, with this ‘brief boost’ . . . hoping . . . & somewhat projecting that we may
not need additionals [sic] like this, nor increasing of the total loan balance to you .
..[...]
Mom, I intend on cleaning this file up for you and applying the interest . . . .
Thank you very much and Love, p.
Id.
Note 4 is an August 16, 2010 email from Paul to Alice with the subject line “RE: Wire
information for May 13, 2010.” Dkt. 1-9. The email states, in part, “This endeavor is very viable
and will be providing a substantial return on your investment!” and, “The figure is $43,000
following some deliberation on the planning sheets.” Id. It closes with “Love, p.” Id.
Although Richard demanded payment on these notes, Paul refused to pay. Dkt. 1 ¶¶ 40–
41; see Dkts. 1-10, 1-11. Richard filed this complaint on April 13, 2020. Dkt. 1.
II.

LEGAL STANDARD

A motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) tests the legal
sufficiency of a complaint to determine whether a plaintiff has properly stated a claim. The
complaint’s “[f]actual allegations must be enough to raise a right to relief above the speculative
level,” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007), with all allegations in the complaint
taken as true and all reasonable inferences drawn in the plaintiff’s favor. King v. Rubenstein, 825
F.3d 206, 212 (4th Cir. 2016). A motion to dismiss “does not, however, resolve contests
surrounding the facts, the merits of a claim, or the applicability of defenses.” Id. at 214.
Although the complaint “does not need detailed factual allegations, a plaintiff’s obligation
to provide the ‘grounds’ of his entitle[ment] to relief requires more than labels and conclusions,
and a formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at
555; see also Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (“Threadbare recitals of the elements of
a cause of action, supported by mere conclusory statements, do not suffice.”). A court need not

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“accept the legal conclusions drawn from the facts” or “accept as true unwarranted inferences,
unreasonable conclusions, or arguments.” Simmons v. United Mortg. & Loan Inv., LLC, 634 F.3d
754, 768 (4th Cir. 2011) (internal quotations omitted). And the court cannot “unlock the doors of
discovery for a plaintiff armed with nothing more than conclusions.” Iqbal, 556 U.S. at 678–79.
This is not to say Rule 12(b)(6) requires “heightened fact pleading of specifics”; instead, the
plaintiff must plead “only enough facts to state a claim to relief that is plausible on its
face.” Twombly, 550 U.S. at 570. Still, “only a complaint that states a plausible claim for relief
survives a motion to dismiss.” Iqbal, 556 U.S. at 679.
III.

ANALYSIS

A. Breach of Contract (Count I)
1. Adequacy of Allegations
Paul argues that Richard fails to state a plausible claim for breach of contract because the
factual allegations do not support a reasonable inference that Paul and Alice formed a written
contract.
“The elements of a breach of contract action are (1) a legally enforceable obligation of a
defendant to a plaintiff; (2) the defendant’s violation or breach of that obligation; and (3) injury or
damage to the plaintiff caused by the breach of obligation.” Sunrise Continuing Care, LLC v.
Wright, 277 Va. 148, 154, 671 S.E.2d 132, 135 (2009) (quoting Filak v. George, 267 Va. 612, 619,
594 S.E.2d 610, 614 (2004)). Paul contests only the first element in his motion to dismiss, and thus
the Court will focus on whether Paul had a legally enforceable obligation to Alice—in other words,
whether Paul and Alice formed a written contract.
Under Virginia law, a contract exists if “the minds of the parties . . . meet in mutual
agreement on every material” term. Belmont v. McAllister, 116 Va. 285, 303, 81 S.E. 81, 87 (1914).

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Specifically,
[i]n order that there may be an agreement, the parties must have a distinct intention
common to both and without doubt or difference. Until all understand alike, there
can be no assent, and, therefore, no contract. Both parties must assent to the same
thing in the same sense, and their minds must meet as to all the terms. If any portion
of the proposed terms is not settled, or no mode is agreed on by which it may be
settled, there is no agreement, . . . .
Dean v. Morris, 287 Va. 531, 538, 756 S.E.2d 430, 433–34 (2014) (quoting Smith v. Farrell, 199
Va. 121, 128, 98 S.E.2d 3, 7 (1957) (internal citations and quotation marks omitted)).
An alleged contract with incomplete or uncertain terms is therefore unenforceable. A
contract is incomplete if “one or more material terms have been entirely omitted.” 287 Va. at 538,
756 S.E.2d at 433 (quoting Smith, 199 Va. at 128, 98 S.E.2d at 7) (internal quotation marks
omitted). A contract is uncertain if it contains all “material terms, but one of them is expressed in
so inexact, indefinite or obscure language that the intent of the parties cannot be sufficiently
ascertained to enable the court to carry it into effect.” Id.
Virginia courts are “reluctant to declare a contract void for indefiniteness and uncertainty”
unless “the agreement provide[s] no reasonable basis for affording a remedy for its breach.” Allen
v. Aetna Cas. & Sur. Co., 222 Va. 361, 364, 281 S.E.2d 818, 820 (1981) (citing High Knob, Inc.
v. Allen, 205 Va. 503, 507, 138 S.E.2d 49, 53 (1964)). “This is especially true where there has been
partial performance.” High Knob, 205 Va. at 507, 138 S.E.2d at 53 (citation omitted). Thus,
[w]hile a contract to be valid and enforceable must be so certain that each party
may have an action upon it, reasonable certainty is all that is required. So where
a contract is to some extent uncertain and ambiguous, it may be read in the light of
surrounding circumstances, and if, reading it thus, its meaning may be gathered, the
same will be enforced. But an agreement, in order to be binding, must be
sufficiently definite to enable a court to give it an exact meaning, and must obligate
the contracting parties to matters definitely ascertained or ascertainable.
Dean v. Morris, 287 Va. at 538, 756 S.E.2d at 433 (quoting Smith, 199 Va. at 128, 98 S.E.2d at 7)
(internal quotation marks omitted). Accordingly, “[c]ontracts are not invalid merely because the

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parties differ as to the construction of particular language employed by them in expressing their
contract.” Manss-Owens Co. v. H.S. Owens & Son, 129 Va. 183, 197, 105 S.E. 543, 547 (1921).
A difference of opinion about how to interpret a provision does not invalidate a contract “unless
the provision is of primary importance affecting the substance of the contract, and is so vague and
indefinite as to make it impossible to determine its meaning, or the substantial rights of the parties
thereunder.” Id.
Here, Richard has adequately pleaded facts that raise a reasonable inference that Paul and
Alice entered into a written contract that contemplated subsequent lending. In his allegations and
the attached documents, Richard demonstrates that Paul’s handwritten, signed letter to Alice
“request[ed] a loan amount of $25,000” on which Paul promised to “pay interest at ±1% per
month.” Dkt. 1 ¶ 9; Dkt. 1-3. Alice then paid Paul the amount he requested—$25,000—by check
the following day. Dkt. 1 ¶ 10; Dkt. 1-4. These facts sufficiently allege all the elements of a
contract—offer, acceptance, and consideration—and that Paul and Alice’s minds met with respect
to the contract’s material terms. Dean, 287 Va. at 538, 756 S.E.2d at 433–34; Belmont, 116 Va. at
303, 81 S.E. at 87.
The Court finds that the terms of the alleged agreement are not “so vague and indefinite as
to make it impossible to determine [the contract’s] meaning, or the substantial rights of the parties
thereunder.” Manss-Owens Co., 129 Va. at 197, 105 S.E. at 547. Therefore, Paul’s assertion that
his loan request is too uncertain to form a contract because it lacks essential terms, including “a
written promise to pay a fixed amount, the terms of the loan agreement, the repayment terms, and
the obligor on the alleged loan,” is unavailing. Paul cites no case law indicating which terms are
in fact essential to a loan contract, much less demonstrates that any lack of information on any of
those terms was a material deficit. One Virginia circuit court found that a memorandum

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memorializing a loan agreement stated “with reasonable certainty the essential terms of the
agreement” when it included “the lender and the borrowers, the principal amount of the loan made,
and how and when the loan is to be repaid.” Faison v. Hughson, 80 Va. Cir. 96, 2010 WL 7375613,
at *3 (Roanoke City Jan. 22, 2010). Paul’s loan request letter contains such terms. Indeed, the letter
lists the names of the lender—Alice—and the borrower—Paul. Dkt. 1 ¶ 9; Dkt. 1-3. It also includes
the principal amount of the loan—$25,000. Id. In addition, the letter states how the loan is to be
repaid—at an interest rate of “±1% per month.”1 Id. And it addresses when the loan is to be
repaid—that “[Paul] expect[s] to begin paying this . . . soon” and “[Paul] [is] working to repay
immediately.” Id. At any rate, “[w]here there is no agreed repayment date of an alleged obligation
to repay money, . . . , it is deemed to be payable on demand.” Belcher v. Kirkwood, 238 Va. 430,
433, 383 S.E.2d 729, 731 (1989) (citing McComb v. McComb, 226 Va. 271, 282, 307 S.E.2d 877,
883 (1983)). Nothing more was needed to form a contract.
Next, Paul argues that the thirteen subsequent loans similarly lack the essential terms of a
loan contract and that the February 2, 2009 loan request letter does not provide for any subsequent
lending. This argument fares no better. Indeed, Richard plainly alleges—and shows in the attached
exhibit—that Paul’s loan request letter stated that “a second request may be necessary . . .
remaining short term & with interest.” Dkt. 1-3. And further, Richard alleges that Alice advanced
funds to Paul thirteen times pursuant to loan requests that “supplemented” his first loan request.

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Paul argues that the alleged agreement fails for want of an interest rate. In Paul’s view,
“±1% per month” is not sufficiently definite because “[a] minus 1% interest rate, which would be
a zero percent interest rate or less, and a plus 1% rate are very different.” Dkt. 5 at 4. The Court is
not persuaded. Merriam-Webster defines “plus or minus,” when used as an adverb, as “more or
less” or “approximately.” Plus or minus, MERRIAM-WEBSTER, https://www.merriamwebster.com/dictionary/plus%20or%20minus (last visited Feb. 19, 2021). Thus, the interest rate
term is stated “with reasonable certainty.” Dean, 287 Va. at 538, 756 S.E.2d at 433.

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Dkt. 1 ¶¶ 11, 28. These facts state a plausible claim that the parties’ contract contemplated further
loans under the same conditions as the first loan.
In light of all the circumstances, at this stage of the litigation, the Court cannot conclude
that the alleged agreement “provide[s] no reasonable basis for affording a remedy for its breach.”
Allen, 222 Va. at 364, 281 S.E.2d at 820. Accordingly, the Court concludes that Richard has
alleged a binding written contract that is “sufficiently definite to enable a court to give it an exact
meaning.” Dean, 287 Va. at 538, 756 S.E.2d at 433.
2. Statute of Limitations
Paul also argues that any possible claim for breach of contract is time-barred.
“[A] motion to dismiss . . . generally cannot reach the merits of an affirmative defense,
such as the defense that the plaintiff’s claim is time-barred.” Goodman v. Praxair, Inc., 494 F.3d
458, 464 (4th Cir. 2007). A court may reach such issues only when “all facts necessary to the
affirmative defense clearly appear on the face of the complaint.” Id. (internal quotation marks,
citations, and emphasis omitted). The defendant “has the burden of proving that he is entitled to
the bar of the statute of limitations.” Brown v. Harms, 251 Va. 301, 306, 467 S.E.2d 805, 807
(1996) (citing Lo v. Burke, 249 Va. 311, 316, 455 S.E.2d 9, 12 (1995)).
Under Virginia law, a plaintiff must bring a breach of contract claim on a written contract
signed by the party to be charged within five years after the cause of action accrues. Va. Code
§ 8.01-264(2). In contrast, oral contracts are subject to a three-year limitation period. Va. Code
§ 8.01-264(4).
A new written promise to pay, however, may restart the statute of limitations on a breach
of contract claim:
If any person against whom a right of action has accrued on any contract, other than
a judgment or recognizance, promises, by writing signed by him or his agent,

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payment of money on such contract, the person to whom the right has accrued may
maintain an action for the money so promised, within such number of years after
such promise as it might be maintained if such promise were the original cause of
action. An acknowledgement in writing, from which a promise of payment may be
implied, shall be deemed to be such promise within the meaning of this subsection.
Va. Code § 8.01-229G.1; see also Ingram v. Harris, 174 Va. 1, 1, 5 S.E.2d 624 (1939) (“An
acknowledgment or promise made before the statute of limitations has run vitalizes the old debt
for another statutory period dating from the time of the acknowledgment or promise, while an
acknowledgment made after the statute has run gives a new cause of action, for which the old debt
is a consideration.”) (interpreting prior version of Virginia Code section with same language).
In addition, the death of a plaintiff tolls the statute of limitations:
If a person entitled to bring a personal action dies with no such action pending
before the expiration of the limitation period for commencement thereof, then an
action may be commenced by the decedent’s personal representative before the
expiration of the limitation period . . . or within one year after his qualification as
personal representative, whichever occurs later.
Va. Code § 8.01-229B.1.
For loans payable on demand, the statute of limitations starts to run on the date the loan is
made. Id. (finding that three-year statute of limitations applicable to oral contracts began to run on
date transfers were made, barring claims for repayment of transfers made more than three years
before suit had been filed); see also Inv. Assocs. v. Copeland, 262 Va. 244, 252, 546 S.E.2d 431,
436 (2001) (same) (citing Guth v. Hamlet Assocs., Inc., 230 Va. 64, 72, 334 S.E.2d 558, 563–64
(1985)).
Richard alleges that Paul and Alice entered into a contract on February 3, 2009, and that
Alice made the last loan pursuant to that contract on September 27, 2012. Dkt. 1 ¶ 11. Richard also
alleges that Paul acknowledged his obligation to pay Alice for the loans in his November 11, 2014
email responding to Alice’s requests that he sign the October 14, 2014 letter listing all fourteen

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loans. Dkt. 1 ¶ 19. Paul’s email stated, in part, “All since the beginning of 2009, [ . . . ] when I
asked for a loan to sustain what we’d begun, I have answered you as I do now . . . I am certain
that I will be able to pay you back, with interest!” and “I repeat . . . I am certain that I will be able
to pay you back!” Id.; Dkt. 1-6 (emphasis in original). Finally, Richard alleges that Alice died on
January 29, 2019, Dkt. 1 ¶ 1, and that Richard became executor of Alice’s estate on May 1, 2019.
Id. ¶ 2. Richard filed the complaint alleging breach of contract on April 13, 2020. Id.
At this stage of the litigation, the Court concludes that Paul has not met his burden of
proving that the statute of limitations bars a breach of contract action.
Because Paul contends that Richard has not alleged the existence of a written contract
embracing all material terms, Paul analyzes the statute of limitations issue assuming, for the sake
of argument, that Richard “can allege additional essential oral terms to establish” oral contracts
between Alice and Paul. Dkt. 5 at 7. A suit for breach of such oral contracts would be governed
by the three-year statute of limitations and would be barred. Id. But as discussed above, Richard
has adequately alleged that Paul and Alice formed a written contract for the loans. Paul’s argument
fails to grapple with, much less rebut, Richard’s consistent factual allegations—and attached
exhibits—describing how the parties entered into a written contract, not a series of oral contracts.
E.g., Dkt. 1 ¶¶ 9, 10, 27; Dkt. 1-3.
Paul’s obligations to repay Alice’s loans were payable on demand, and the statute of
limitations began to run from the date of the last loan amount issued. The statute of limitations for
a breach of contract action on the written contract would have expired on September 27, 2017—
five years from the date of the last loan amount.
But that is not the end of the matter. Richard has further alleged that Paul’s November 11,
2014 email—which referenced the loans listed in the October 14, 2014 letter and expressed Paul’s

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certainty that he would be able to pay Alice back—was “[a]n acknowledgement in writing, from
which a promise of payment may be implied.” Va. Code § 8.01-229G.1. See also Guth, 230 Va. at
75–76, 334 S.E.2d at 566 (finding, on motion for summary judgment, that status reports regarding
loans that “were in writing, prepared in the name of the corporate defendant, but contained no
express promise to pay” constituted “evidence of direct and unqualified admissions of present,
subsisting debts from which promises to pay would naturally and irresistibly be implied”). Because
such an acknowledgement restarts the statute of limitations for a person who has a right of action
for the promised money, Paul’s email extended the statute of limitations on the breach of contract
claim to November 11, 2019.
Thus, when Alice died on January 29, 2019, the limitation period on her right to bring a
breach of contract claim had not yet expired. Richard, as executor of Alice’s estate, could bring
the breach of contract action “before the expiration of the limitation period . . . or within one year
after his qualification as personal representative, whichever occur[red] later.” Va. Code § 8.01229B.1. Consequently, Richard had until May 1, 2020—one year after he qualified as executor of
Alice’s estate—to file the breach of contract claim. Richard filed this claim based on an alleged
written contract on April 13, 2020. Thus, the Court cannot conclude that Richard’s claim is timebarred.
Accordingly, the Court will deny Paul’s motion to dismiss the breach of contract claim
(Count I).
B. Breach of Promissory Notes (Count II)
Paul also argues that Richard fails to state a plausible claim for breach of promissory notes
because the factual allegations do not support a reasonable inference that Paul issued Alice any
promissory notes.

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Under Virginia law, which has adopted and codified the Uniform Commercial Code
(“UCC”) on the issue, a “negotiable instrument” is
an unconditional promise or order to pay a fixed amount of money, with or without
interest or other charges described in the promise or order, if it
(1)
Is payable to bearer or to order at the time it is issued or first comes into
possession of a holder;
(2)
Is payable on demand or at a definite time; and
(3)
Does not state any other undertaking or instruction by the person promising
or ordering payment to do any act in addition to the payment of money . . .
Va. Code § 8.3A-104(a). A negotiable “instrument is a ‘note’ if it is a promise” rather than an
order. Va. Code § 8.3A-104(e). A “promise” is “a written undertaking to pay money signed by the
person undertaking to pay. An acknowledgment of an obligation by the obligor is not a promise
unless the obligor also undertakes to pay the obligation.” Va. Code § 8.3A-103(a)(9); see also Va.
Code § 8.3A-106 (defining an unconditional promise). Comment 3 to Virginia Code § 8.3A-103
clarifies that this qualification “is intended to make it clear that an I.O.U. or other written
acknowledgment of indebtedness is not a note unless there is also an undertaking to pay the
obligation.”
Finally, Virginia Code § 8.01-27 provides that
[a] civil action may be maintained upon any note or writing by which there is a
promise, undertaking, or obligation to pay money, if the same be signed by the party
who is to be charged thereby, or his agent. The action may also be maintained on
any such note or writing for any past due installment on a debt payable in
installments, although other installments thereof be not due.
Here, Richard alleges that Paul made four promissory notes to Alice. Dkt. 1 ¶¶ 36–39; see
Dkts. 1-3 (“Note 1”), 1-7 (“Note 2”), 1-8 (“Note 3”), 1-9 (“Note 4”).
Viewing the allegations in the light most favorable to the plaintiff, the Court nonetheless
finds that Richard has failed to state a plausible claim for breach of promissory notes. Simply put,
none of the alleged letters or emails are promissory notes. Although they include references to

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dollar amounts and are signed by the obligor, they do not contain “unconditional promise[s] . . . to
pay a fixed amount of money.” Va. Code § 8.3A-104(a). Accordingly, the documents are not
“written undertaking[s] to pay money,” Va. Code § 8.3A-103(a)(9), nor—even though they are
addressed to the lender—are they expressly “payable to bearer” or “payable on demand or at a
definite time.” Va. Code § 8.3A-104(a).
At most, Notes 1 and 2 are acknowledgments of Alice’s loans to Paul and Paul’s obligation
to repay Alice for those loans—in other words, they are I.O.U.s. But in the absence of any
“undertak[ing] to pay the obligation,” mere acknowledgments of indebtedness are not promissory
notes. Va. Code § 8.3A-103(a)(9); see also id., Comment 3. Richard alleges—and Paul does not
dispute—that Paul has made no attempt to pay the alleged debt. Finally, Notes 3 and 4 cannot
support a reasonable inference that they are acknowledgments of obligations to pay. The only
dollar amounts they contain appear to be requests for wire transfers. In sum, these four writings
cannot fairly be construed as promissory notes.
Because none of the documents that Richard alleges are promissory notes, the Court finds
that the complaint fails to state a plausible claim for relief based on a breach of promissory note
theory. Accordingly, the Court will grant Paul’s motion to dismiss the breach of promissory notes
claim (Count II).
IV.

CONCLUSION

For the foregoing reasons, the Court concludes that the complaint’s factual allegations state
a plausible breach of contract claim but fail to state a plausible breach of promissory note claim.
Accordingly, the Court will grant Paul’s motion with respect to the breach of promissory notes
claim (Count II) but deny his motion with respect to the breach of contract claim (Count I).
An appropriate Order will issue.

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The Clerk of Court is hereby directed to send a copy of this Memorandum Opinion to all
counsel of record.
Entered this ____ day of February, 2021.
19th

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