Michael Klein v. Stanley Campbell

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UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 22-1497
MICHAEL J. KLEIN, Personal Representative of the Estate of Richard A. Kay; EF
INVESTMENTS, LLC; EAGLE FORCE HOLDINGS, LLC,
Plaintiffs – Appellees,
v.
STANLEY V. CAMPBELL; EAGLEFORCE ASSOCIATES, INC.,
Defendants – Appellants.
No: 22-1524
MICHAEL J. KLEIN, Personal Representative of the Estate of Richard A. Kay; EF
INVESTMENTS, LLC; EAGLE FORCE HOLDINGS, LLC,
Plaintiffs – Appellants,
v.
STANLEY V. CAMPBELL; EAGLEFORCE ASSOCIATES, INC.,
Defendants – Appellees.
Appeals from the United States District Court for the Eastern District of Virginia, at
Alexandria. Leonie M. Brinkema, District Judge. (1:20-cv-01122-LMB-JFA)
Argued: March 7, 2023 Decided: June 6, 2023
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Before AGEE, HARRIS, and QUATTLEBAUM, Circuit Judges.
Affirmed in part, vacated in part, and remanded by unpublished opinion. Judge Agee wrote
the opinion, in which Judge Harris and Judge Quattlebaum joined.
James Bennett Kinsel, PROTORAE LAW PLLC, Tysons, Virginia, for Appellants/Cross-
Appellees. Harold Mark Walter, OFFIT KURMAN, PA, Columbia, Maryland, for
Appellees/Cross-Appellants.
Unpublished opinions are not binding precedent in this circuit.
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AGEE, Circuit Judge:
This appeal arises out of an unsuccessful attempt to form a partnership. Richard
Kay, a businessman, sought to acquire a partnership interest in Stanley Campbell’s
established business, EagleForce Associates, Inc. (“Associates”). As the two men
negotiated a potential partnership agreement, Kay started transferring funds to Associates
with the expectation that those funds would constitute a capital investment establishing his
equity interest in the partnership. To protect Kay in case negotiations soured, Campbell
executed a promissory note on behalf of Associates indebting Associates to Kay in the
amount of $700,000, roughly the balance lent to Associates at the time of the note’s
execution. After Kay advanced additional funds to Associates—approximately $1.2
million—without executing an additional promissory note, negotiations ceased without a
final partnership agreement.
Nonetheless, Kay sought to establish the partnership by judicial decree in Delaware
state court. In that proceeding, Kay denied the existence of a loan to Associates and argued
that the money he had transferred represented his equity interest in the business. For his
part, Campbell denied the existence of a partnership but repeatedly acknowledged the
transferred funds were a loan. After the Delaware court ruled in favor of Campbell and
found there was no enforceable partnership, Kay sought to enforce the note by demanding
repayment. When Campbell refused to pay, Kay and his affiliated companies, Eagle Force
Investments, LLC (“Investments”) and EF Holdings, LLC (“Holdings”) (collectively
“Plaintiffs”), brought this action in the Eastern District of Virginia against Campbell and
Associates (collectively “Defendants”) to recover the total amount transferred,
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approximately $1.9 million. Contrary to the position taken in the Delaware litigation,
Defendants now deny both the validity of any loan and their liability to repay any monies.
After discovery, the district court granted summary judgment to Plaintiffs, holding that
Defendants were jointly and severally liable to them for the principal amount of roughly
$1.9 million. Given that holding, the only remaining issue to be decided was when interest
on that principal amount began to accrue. Following a bench trial, the district court
determined that interest commenced five days after Plaintiffs demanded repayment and
awarded Plaintiffs $2,101,003.88 in total damages. Both parties appealed.
For the following reasons, we affirm in part, vacate in part, and remand for further
proceedings.
I. Partnership Negotiations & Legal Proceedings
A. Underlying Facts
Richard Kay was the sole member of Investments, which in turn is the sole member
of Holdings. 1 Stanley Campbell is the sole owner, president, and chief executive officer of
Associates, a healthcare technology development and consulting firm.
In January 2014, Kay and Campbell began discussing the possibility of becoming
business partners in Associates—Kay planned to invest the capital and Campbell intended
to contribute his intellectual property. Despite not having a binding partnership agreement
1
Shortly after the Complaint in this action was filed, Kay passed away and the
personal representative of his estate, Michael Klein, was substituted as plaintiff. Any
further reference to “Plaintiffs” includes Klein.
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yet in place, Kay immediately began funding Associates. 2 By July 7, 2014, Kay had
provided Associates $644,000.
Although the men expected for their partnership agreement to go as planned—
meaning that the money Kay transferred would be considered his equity capital in the
entity—they also recognized the need for a repayment contingency in case negotiations
failed. To accomplish this backup plan, Kay’s attorney drafted a promissory note (“the
Note”), which was signed on July 7, 2014. The men agreed that the Note would “become
null and void once” Kay and Campbell finalized their partnership agreement. J.A. 2417.
Relevant here, the Note stated that Associates, as “the Borrower,” promised to pay
Kay, “the Lender,” “upon demand, the principal sum of Seven Hundred Thousand Dollars
($,700,000) [sic]” with interest. J.A. 63 (internal quotation marks omitted). It did not
reference Campbell personally, Holdings, or Investments. Additionally, the Note provided
that the principal would not begin accruing interest until Associates was in default, which
would occur if Associates failed to repay the loan within five days of its due date. Although
the Note stated that it was due “upon demand,” it also included a provision stating that the
loan was due three months after the Note was executed, which would make payment due
on October 7, 2014. J.A. 63. Campbell signed the Note on behalf of Associates.
2
All payments originated from either Kay’s personal bank account or from his
American Express account. In some instances, the funds were passed through Investments
or Holdings before being transferred to Associates directly or paid to one of Associates’
creditors.
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On August 28, 2014, Campbell and Kay signed two additional documents (the
“Transaction Documents”) that set out certain terms of Campbell and Kay’s desired
partnership. The Transaction Documents did not reference the Note.
As negotiations dragged on, Kay continued to contribute money to Associates and
by February 2015, he had contributed roughly $1.9 million total—the original $700,000
represented by the Note and approximately $1.2 million after executing the Note. 3 The
parties did not execute a second promissory note covering the additional money loaned or
provide any specific written documentation evidencing a modification of the Note to cover
the additional funds.
The partnership negotiations eventually failed. Campbell informed Kay via email
that they “ha[d] reached an impasse that we are unable to resolve” and that partnership
negotiations would cease. J.A. 1966. Campbell also noted that “[w]e have booked the
funding as a loan.” J.A. 1966. Kay replied, “Your email is totally untrue, misleading and
the [Associates] investment money has never been a loan[.] You know that as does
everyone. I am 50 percent owner [of Associates] and will continue to operate in that role.”
J.A. 1966.
3
As will be discussed, the parties dispute the exact amount of money Plaintiffs
provided to Defendants. For simplicity, we refer to the total amount transferred as roughly
or approximately $1.9 million, consisting of the undisputed original $700,000
contemplated by the Note and the disputed additional roughly $1.2 million allegedly given
through either an oral modification of the Note or a separate oral agreement. Use of this
figure is not meant to signal an opinion on the actual amount of money lent, which, as
discussed below, remains a question for the district court to resolve.
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B. The Delaware Litigation
In March 2015, Plaintiffs filed a lawsuit in the Delaware Court of Chancery 4 seeking
a judicial decree establishing a binding partnership agreement that recognized Kay as
fifty-percent owner of Associates based on the Transaction Documents. 5 Plaintiffs did not
reference the Note or any obligation of repayment of the funds Kay had advanced.
Campbell, the sole defendant, responded that the Transaction Documents were not a final
partnership agreement and that he had never agreed to be bound by them. Throughout the
litigation, Kay denied the existence of the loan while Campbell repeatedly affirmed that he
had received the money from Kay only as a loan, referenced the Note to support his
position, and pledged his personal liability for at least some of the funds. The Delaware
court ultimately concluded that Plaintiffs did not show that the partnership existed and
entered judgment for Campbell.
Certain parts of the testimony and evidence produced in the Delaware litigation are
relevant to the current appeal. First, Kay testified that the $1.9 million he invested in
Associates “was never a loan.” J.A. 1963. Second, Kay’s attorney who had drafted the Note
stated that Note “does not” bind Campbell personally. J.A. 2538. Finally, for his part,
Campbell stated at trial that he “agreed to be personally liable on [the Note] for at least part
4
Delaware was selected per a forum-selection clause in the Transaction Documents.
5
The Delaware lawsuit named only Holdings and Investments as plaintiffs. Kay
simply verified the allegations contained in the Complaint and testified during the trial.
However, because Kay was the sole owner of these entities, for ease of reference, we refer
to the Delaware Litigation as involving the same “Plaintiffs” as this action.
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of the money that was coming in from [Kay].” J.A. 300. He explained that the Note was in
place so that “there was always a mechanism to make [Kay] whole that I was [a] signatory
on, all the way up to even now.” J.A. 300.
Two of Campbell’s responses to Kay’s requests for admissions and interrogatories
in the Delaware litigation also bear on the current case. He denied Kay’s request that he
“[a]dmit that [he] never entered into an agreement to borrow money from Richard Kay.”
J.A. 71. Campbell elaborated that “he has entered into an agreement to borrow money from
Richard Kay and/or his affiliates. [Campbell] further states that the [Note] was drafted by
Richard Kay’s attorneys, reviewed by [Campbell’s] attorney and executed with the
anticipation that any additional monetary contributions from Kay would be subject to the
same terms and conditions as the original loan.” J.A. 71.
There were also numerous documents disclosed in the Delaware litigation that
consistently acknowledged that Defendants owed money to Kay and Investments.
Specifically, in accordance with a Delaware court order, Defendants provided Plaintiffs
with more than one hundred documents listing Defendants’ accounts payable, balance
sheets containing Associates’ current liabilities, general ledgers, and tax returns reflecting
obligations to Kay and Investments. For example, on August 19, 2015, Defendants
provided Plaintiffs with their accounts payable reflecting: (1) a loan payable to “Richard
Kay Personal” described as “Personal Loan (Campbell Personal)” for $772,596.84; and (2)
a loan payable to “EagleForce Holding” described as a “Corporate Loan” for
$1,147,254.94. J.A. 317–18. The total of these two loans is $1,919,851.78. Similarly,
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Defendants supplied Plaintiffs with Associates’ corporate balance sheets for the year 2015
that listed “Loans Payable” to Kay as $1,737,008.16. J.A. 618.
C. District Court Proceedings
After losing in the Delaware litigation and unsuccessfully attempting to enforce the
Note privately, Plaintiffs brought a diversity suit in the Eastern District of Virginia, in
which they completely changed theories from the positions taken in the Delaware litigation.
Plaintiffs brought four claims in federal court against Defendants based on the existence of
the alleged loan.
Plaintiffs’ Complaint alleged three theories that each lead to liability for the entire
$1.9 million. First, in Count I, Plaintiffs asserted a breach of a contractual promise to pay
subsequently modified, acknowledged, renewed, and affirmed. This theory alleged that
Defendants were liable for all the money under the Note and a subsequent oral modification
of the Note that changed the principal amount to include the additional $1.2 million lent
after its execution. Alternatively, the second and third claims operated in tandem, with
Count II claiming a breach of written contract, requesting only the $700,000 expressly
covered by the Note. Count III alleged a breach of oral promise to pay based on the theory
that Defendants were liable for the additional $1.2 million under a separate oral agreement.
Finally, as an alternative to a contract-oriented approach, Count IV pursued an equitable
claim, under a theory of unjust enrichment. In total, Plaintiffs sought $1,985,287 in
damages plus interest.
Defendants moved to dismiss, arguing that Plaintiffs failed to state a claim against
Campbell because he was not listed as a Borrower on the Note. They also argued that the
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claims were time-barred under the applicable statute of limitations. In an oral order, the
district court denied the motion, reasoning that Campbell was “in a very difficult position
given his admission[]” in the Delaware litigation that he was personally liable for some
part of the money. J.A. 198. The district court also explained that Campbell’s admissions
in the Delaware litigation saved Plaintiffs’ claims from any time-bar.
The parties then cross-moved for summary judgment. In relevant part, Defendants
argued that the Note was not enforceable because of Kay’s statements in the Delaware
litigation that he never intended the money to be a loan, that the only parties to the Note
were Kay and Associates, and that all claims were barred by the relevant statute of frauds
and statute of limitations. In another oral order, the district court granted Plaintiffs’ motion
as to liability on Counts I–III and denied Defendants’ motion in full. 6 The district court
noted that this case was “difficult . . . to some degree” because of the “very inconsistent
statements and positions from Mr. Kay,” J.A. 3276, and that “both Mr. Kay and Mr.
Campbell would have very significant credibility problems, because both have made
representations . . . under oath, and before a Court” that contradicted their positions in this
6
Having found liability under the Note and a subsequent oral agreement or
modification, the district court did not make an explicit finding as to Plaintiffs’ alternative
claim for unjust enrichment. Nonetheless, because “the district court’s order lacks any
indication that the court intended it to be anything but final,” and its order entering
judgment against Defendants was apparently calculated to conclude all the claims before
it, see J.A. 3436 (stating that it held a bench trial on “the outstanding issues”), we conclude
that there is a final, appealable order. AirFacts, Inc. v. de Amezaga, 909 F.3d 84, 91 (4th
Cir. 2018); c.f. Martin v. Duffy, 858 F.3d 239, 246 (4th Cir. 2017) (“Although a district
court’s failure to address a claim may foreclose appellate review of that claim, courts have
found that an order that fails to explicitly address or dispose of all claims presented to the
court may nevertheless qualify as a final, appealable order if the language used in the order
is calculated to conclude all the claims before the district court.” (cleaned up)).
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case, J.A. 3304. Nevertheless, the district court concluded that it knew “there was
something going on, some agreement.” J.A. 3297. It reasoned that Campbell had repeatedly
referenced the Note in the Delaware litigation and also relied on Defendants’ financial
documents, which consistently acknowledged the loan.
Additionally, the district court concluded that there were sufficient affirmations by
Campbell that he “believed and maintained that he was personally liable on [the N]ote” to
justify a grant of summary judgment against him. J.A. 3304. The district court posited that
Campbell had acknowledged multiple times in the Delaware litigation that the Note was
binding on him personally, and there was no “way [to] get around that” in this litigation.
J.A. 3263. Thus, the district court held that Defendants were jointly and severally liable for
all the funds transferred by Plaintiffs, but set a bench trial to determine the exact damages
because it was “not at all comfortable . . . at the summary judgment stage” determining the
precise amount due. J.A. 3305.
Thereafter, the district court filed an order clarifying its decision, confirming
Defendants’ liability on Counts I, II, and III. In so doing, the court declined to find which
theory of liability existed in this case, instead essentially concluding that because clear
liability existed on at least one of the claims, it didn’t need to parse them out separately.
For example, the court explained that “the oral promise to repay in Count III may be found
to be governed by the terms of the Note if the facts on damage so prove, which would
essentially establish liability under Count I alone, and would render alternative Counts II
and III redundant.” J.A. 3254–55. The district court also clarified that although it “awarded
summary judgment to all three plaintiffs, [it] expect[ed] the evidence will show that
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virtually all the money originated from [Kay].” J.A. 3255. It then stated that “[a]ny
arguments which [D]efendants plan to advance based on [P]laintiffs’ identities will be
rejected as a waste of the Court’s time, particularly given [that] Kay’s [death made him
unavailable] to testify to the differences between the entities.” J.A. 3255.
Despite the district court’s prior statements that it was uncomfortable deciding the
amount of money Plaintiffs lent to Defendants, it later made such a decision in response to
Plaintiffs’ motion in limine. In that motion, Plaintiffs contended that in responses to
interrogatories during this litigation Defendants “made judicial admissions” that Plaintiffs
transferred to Defendants at least $1,917,851.78 by providing a chart listing the transfers
they had received. J.A. 3321. As a consequence, Plaintiffs argued that “[a]ll that remain[ed]
to [be] established at trial” was whether Defendants owed the additional $31,961.81
Plaintiffs sought. J.A. 3323. At an oral hearing on that motion, the district court explained
that in reviewing the parties’ materials, it now felt “comfortable” finding the principal
amount due to be $1,919,853.78, relying on the “overwhelming evidence” produced in the
Delaware litigation. J.A. 3668. In so doing, it noted that there were “a couple-of-dollar
discrepanc[ies] one way or the other,” but found these immaterial. J.A. 3668. The court
therefore denied Plaintiffs’ motion as moot and stated that all that remained for trial was a
determination of when that principal amount began accruing interest.
At a bench trial, Plaintiffs argued that interest began accruing on October 12, 2014,
three months and five days after the Note was signed. They reasoned that the Note
specifically provided that payment would be due three months after its execution.
Defendants contended that interest did not begin to accrue until five days after Plaintiffs
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demanded payment in August 2020, relying on the “on demand” language present in the
Note. As will be discussed in more depth below, the district court found that interest began
accruing five days after Plaintiffs demanded payment in 2020. Accordingly, the court
awarded Plaintiffs $2,101,003.88 in damages—$1,919,853.78 in principal and
$181,150.10 in interest. J.A. 3706.
Both parties timely appealed from portions of the district court’s judgment. 7
Defendants bring sixteen challenges to the district court’s liability and damages
determination, which can be grouped into five broad categories. First, they contend that the
district court erred in granting summary judgment to Plaintiffs because there is evidence
that Kay denied the existence of the loan. Second, Defendants assert that the district court
erred by adding parties to the Note. Third, they posit that Plaintiffs’ claims are barred by
the applicable statute of limitations. Fourth, Defendants argue that there was insufficient
evidence of either an oral modification of the Note or of a separate agreement to hold
Defendants liable for the additional $1.2 million over and above the amount on the face of
the Note. Finally, they claim that there is a dispute of fact regarding the amount Plaintiffs
lent to them.
Plaintiffs cross-appeal from the district court’s interest-accrual finding, contending
that the district court erred in concluding that interest did not begin to accrue on the
principal amount until Plaintiffs demanded payment.
7
The Court has jurisdiction over this appeal under 28 U.S.C. § 1291.
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For clarity, we organize our analysis of Defendants’ arguments by theory of
liability, taking those related to the Note first. We will then address the contentions
involving the additional approximately $1.2 million. We will consider last Plaintiffs’
challenge to the district court’s interest accrual determination.
II. Standard of Review
We review the district court’s grant of summary judgment de novo. Belmora LLC
v. Bayer Consumer Care AG, 987 F.3d 284, 291 (4th Cir. 2021). “Summary judgment is
appropriate when there is no genuine issue of material fact and the moving party is entitled
to judgment as a matter of law.” Id. (citation omitted). Where the district court disposes of
cross-motions for summary judgment, we consider each motion separately, resolving all
factual disputes in the light most favorable to the party opposing that motion. Id.“We review a judgment following a bench trial under a mixed standard of review—
factual findings may be reversed only if clearly erroneous, while conclusions of law . . .
are examined de novo.” Sing Fuels Pte Ltd. v. M/V Lila Shanghai, 39 F.4th 263, 269–70
(4th Cir. 2022) (citation omitted).
III. The Note
Defendants first argue that the district court erred by granting summary judgment
to Plaintiffs for liability under the Note (Counts I and II) because: (1) Kay specifically
denied the existence of the loan, (2) Plaintiffs failed to provide clear and convincing
evidence that the Note was modified to expand the listed “Lenders” to include Investments
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and Holdings, and (3) Plaintiffs failed to provide clear and convincing evidence that the
Note was modified to expand the listed “Borrowers” such that Campbell was also
personally liable under the Note. We consider each argument in turn, ultimately concluding
that Associates is liable to Kay under the Note, but that there is a genuine dispute of
material fact as to Campbell’s personal liability which precluded summary judgment as to
him individually. We also conclude that there is a genuine dispute of material fact as to
whether any party is liable to Investments and Holdings under the Note such that the award
of summary judgment to them was erroneous.
A. Kay’s Denial of the Loan
The undisputed evidence demonstrates that Associates is liable to Kay for $700,000
under the Note. The Note clearly specifies that Associates is the “Borrower” and Kay is
the “Lender” of the $700,000. And it provides that Associates “promise[s] to pay” Richard
Kay that amount. J.A. 63.
Nonetheless, Defendants contend that because Kay twice denied that the money he
contributed to Associates was a loan—once in an email and once during the Delaware
litigation—the Note lacks mutual assent, rendering it unenforceable.
To be sure, “[m]utual assent by the parties to the terms of a contract is crucial to the
contract’s validity.” Wells v. Weston, 326 S.E.2d 672, 676 (Va. 1985). 8 In determining the
presence of mutual assent, “[t]he law imputes to a person an intention corresponding to the
reasonable meaning of his words and acts.” Lucy v. Zehmer, 84 S.E.2d 516, 521 (Va. 1954)
8
We apply Virginia law in accordance with the terms of the Note.
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(citation omitted). If a person’s “words and acts, judged by a reasonable standard, manifest
an intention to agree, it is immaterial what may be the real but unexpressed state of his
mind.” Id. at 522.
The evidence demonstrates that both Kay and Associates (represented by its
President and CEO, Campbell) objectively intended at the time of execution of the Note
that it would be a binding agreement that Associates would repay Kay the $700,000 he
loaned. Although Kay and Campbell hoped to come to a partnership agreement in which
the funds Kay advanced would be converted into an equity interest, the Note was executed
with the clear understanding that should the partnership agreement not come to fruition,
Associates would pay Kay back the $700,000. That Kay intended the Note to be binding is
further evidenced by the fact that Kay’s attorney drafted the Note and the parties had
previously agreed that they would book the money as a loan. See J.A. 2238 (April 4, 2014,
agreement signed by Kay and Campbell stating that the money loaned by Kay would be
“evidenced by a demand promissory note issued to [Kay] by [Associates]”); J.A. 2539
(Delaware trial testimony of Kay’s attorney stating that the “advances by Mr. Kay were to
be done pursuant to a demand note instrument, and that” after the parties signed the
partnership agreement the money loaned would be “converted to equity”). That Kay later
denied the existence of the loan does not change the fact that there was mutual assent at
the time the Note was executed. See Alexakis v. Mallios, 544 S.E.2d 650, 652 (Va. 2001)
(“Once a competent party makes a settlement and acts affirmatively to enter into such
settlement, his second thoughts at a later time upon the wisdom of the settlement do not
constitute good cause for setting it aside.” (cleaned up)).
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At bottom, the language of the Note is clear and provides that Associates is liable
to Kay for $700,000. Associates cannot evade liability by pointing to statements Kay made
after its execution. Therefore, we conclude that the district court properly determined the
Note is enforceable against Associates for its face amount and summary judgment was
properly granted to Kay on this aspect of Plaintiffs’ claim. 9
B. Investments and Holdings
Our above-stated conclusion applies only to Kay as a payee on the Note because we
conclude that there is a genuine dispute of material fact as to whether any of the Defendants
are liable to Investments and Holding.
Notably, the district court failed to consider whether the Note was modified to
include Investments and Holdings as “Lenders.” The court instead rejected Defendants’
9
Defendants also argue that the Note is unenforceable because it is an agreement to
agree, which is prohibited under Virginia law. See Allen v. Aetna Cas. & Sur. Co., 281
S.E.2d 818, 820 (Va. 1981) (per curiam) (concluding that an agreement with terms to be
negotiated at a later date is “too vague and indefinite to be enforced”). They contend that
the Note was a waypoint “‘made along the way’ towards the desired equity investment.”
Opening Br. 26. We disagree. The terms of the Note were final and unambiguous.
Associates clearly agreed that it would pay Kay the $700,000 he loaned. That the parties
were simultaneously in the process of negotiating a partnership agreement that would
supersede the Note if completed is of no consequence to the validity of the fully executed
Note.
Defendants also posit that the Note is unenforceable because it violates the provision
of Virginia’s statute of frauds that requires “any agreement or promise to lend money or
extend credit in an aggregate amount of $25,000 or more” to be in writing and signed by
the party to be charged. Va. Code Ann. § 11-2(9). They assert that because Kay had not
provided the full $700,000 when the Note was executed, the Note was a promise to provide
money and, to be enforceable, Kay was required to sign it. We again disagree. The Note is
not and cannot be construed as a promise to lend money. There is no language in the Note
obligating Kay to lend any particular sum in the future: it represents monies lent.
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arguments that Investments and Holdings were not subject to the Note as a “waste of [its]
time.” J.A. 3255. But determining whether Defendants are liable under the Note to either
Investments or Holdings is not a waste of time. It is instead necessary before judgment can
be entered in either party’s favor.
We cannot make the requisite finding on appeal because our review of the record
reveals a material dispute of fact regarding whether the Note was modified such that any
of the defendants would be liable to Investments or Holdings under it. Although Campbell
stated that he entered into “an agreement to borrow money from Richard Kay and/or his
affiliates,” J.A. 71, this does not support Plaintiffs’ argument that the Note was modified
to make Holdings and Investments “Lenders” under the Note. Campbell’s statement can
be understood to say that Campbell entered into an agreement to borrow money from Kay
or his affiliates. This language does not clearly and undisputedly demonstrate, therefore,
that Campbell entered into an agreement to borrow money from Investments or Holdings—
he may have entered into an agreement only with Kay. And, even if it did demonstrate that
Campbell entered into an agreement with Investments and Holdings, it certainly does not
evidence his or Associates’ obligation to Investments and Holdings under the Note given
that it does not reference the Note. Additionally, while Associates’ accounts payable
records consistently include a “Corporate Loan” payable to “EagleForce Holding[s],” see,
e.g., J.A. 318, there is no indication that the loan being referenced is the Note.
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We therefore conclude that a genuine dispute of material fact exists as to
Defendants’ liability to Investments and Holdings such that summary judgment in their
favor was erroneous. 10
C. Campbell’s Liability Under the Note
Similarly, although summary judgment as to Associates’ liability under the Note
was proper, we conclude that the district court erred in granting summary judgment as to
Campbell individually because there is a genuine dispute of material fact as to whether he
is personally liable under the Note.
The only “Borrower” named on the Note is Associates. J.A. 63. And, as indicated
earlier, any oral agreement to modify a contract must be shown by “clear, unequivocal and
convincing evidence, direct or implied.” Reid v. Boyle, 527 S.E.2d 356, 145 (Va. 2000)
(citation omitted).
Plaintiffs contend that the evidence demonstrates that the parties agreed to modify
the Note to include Campbell as a “Borrower” personally liable under the Note. They point
to Campbell’s Delaware testimony in which he stated that he “agreed [he was] personally
liable on a promissory note for at least part of the money that was coming in from [Kay].”
J.A. 300. Plaintiffs also rely on Campbell’s Delaware response to admission requests where
10
Relatedly, Defendants argue that the district court erred by not granting their
earlier motion to dismiss Investments and Holdings because Plaintiffs failed to provide
evidence that the parties modified the Note to include either of them as lenders under the
Note. We reject this argument because Campbell’s statements and Associates’ accounts
payable records provide sufficient evidence that Defendants may be liable to one or both
of these entities per an oral modification so as to survive a motion to dismiss.
19
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Campbell explained that he “entered into an agreement to borrow money from Richard
Kay and/or his affiliates.” J.A. 71. While this evidence supports a conclusion that Campbell
is personally liable for some part of the money loaned by Kay, it does not provide clear
and convincing evidence of an oral modification of the Note such that he would be liable
for a particular amount under it. Instead, that evidence could be construed to show that
Campbell was to be personally liable for some part of the additional approximately $1.2
million Kay transferred rather than for the $700,000 referenced on the face of the Note.
Moreover, particularly relevant for purposes of summary judgment is that the
foregoing is not the only evidence in the record on the issue of Campbell’s personal
liability. There is also evidence that Campbell was not personally liable under the Note.
For example, Kay’s attorney who drafted the Note testified in the Delaware litigation that
it “does not” bind Campbell personally. J.A. 2538. Additionally, at some point before the
Delaware litigation, Campbell attempted to pay Kay $2,000, ostensibly as a partial
repayment on a loan. In a Delaware deposition, Klein testified that that payment was
Campbell’s attempt to “plant evidence” so that he could point to it during litigation and
say, “see this was a note, I even made a repayment on the [N]ote.” J.A. 2115. This
testimony implies that Klein—now representing Kay’s estate in this litigation—believed
that Campbell did not personally owe any money to Kay.
Given the ambiguous and conflicting evidence, we conclude that there is a material
dispute of fact as to whether the Note was modified so as to render Campbell personally
liable for some or all of the $700,000 it represents. Factual findings and credibility
determinations are necessary to determine whether Campbell is personally liable under the
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Note and those determinations cannot be made at summary judgment. See Tekmen v.
Reliance Standard Life Ins. Co., 55 F.4th 951, 959 (4th Cir. 2022) (“Ordinarily in the
summary judgment context, the court ‘cannot weigh the evidence or make credibility
determinations.’” (citation omitted)). Summary judgment was therefore inappropriate as to
Campbell on the Note and the district court’s decision on this claim as to his personal
liability must be vacated.
IV. The Additional $1.2 Million
Defendants next posit that the district court erred by granting summary judgment to
Plaintiffs for the additional $1.2 million Kay transferred to Associates because: (1)
Plaintiffs’ claims for the additional $1.2 million are time-barred, (2) there is a genuine
dispute of material fact regarding whether Defendants are liable for the additional $1.2
million, and (3) there is a genuine dispute of material fact as to the precise amount Plaintiffs
lent Defendants above the original $700,000 covered by the Note, which we’ve simply
short-handed as $1.2 million for convenience. We address each contention in turn.
A. Statute of Limitations
First, Defendants assert that Plaintiffs’ claims for the additional $1.2 million loaned
are time-barred regardless of the theory of liability, so the district court erred in
adjudicating the merits. As a preliminary matter, there are three potentially applicable
limitations periods depending on whether the parties’ subsequent oral agreement regarding
the additional amount loaned was (1) a modification of the Note and due on a specific date,
(2) a modification of the Note and due on demand, or (3) a separate oral agreement. But,
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as will be discussed, we hold that Plaintiffs’ claims for the additional $1.2 million are
timely regardless of the applicable limitations provision.
If the agreement was a modification of the Note, then its terms would be subject to
the same statute of limitations as the Note, meaning that one of two provisions would apply
depending on whether the Note is interpreted to be due on a certain date or due on demand.
See infra Section V (discussing conflicting language in the Note as to its due date in the
context of when interest began to accrue on the initial $700,000 loan). If the Note was due
on a specific date, then Va. Code Ann. § 8.3A-118(a) applies. It provides 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 after the due date.” Id. Here, under the interpretation of the
Note that specifies that payment was due on a specific date, payment was due three months
after the Note’s execution, which is October 7, 2014. This litigation, filed on September
25, 2020, fell within six years of that date, which would make Plaintiffs’ claim regarding
the Note timely.
But if a different interpretation of the Note governs and it was due on demand, then
Va. Code Ann. § 8.3A-118(b) would apply. That section requires that “an action to enforce
the obligation of a party to pay the note must be commenced within six years after the
demand.” Id. Plaintiffs demanded payment on August 28, 2020, and brought this action on
September 25, 2020, clearly within the six-year limitations period. Thus, to the extent any
additional agreement about the later-transferred $1.2 million was an oral modification of
the Note, it would be subject to the same statute of limitations as the Note and would be
timely under either applicable six-year limitations provision.
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However, if the additional money was lent pursuant to a separate oral agreement,
Va. Code Ann. § 8.01-246(4) applies, which states that an action founded upon an
unwritten contract must be brought within three years. Id. 11 Plaintiffs indisputably brought
this action more than three years after any alleged oral agreement occurred because any
oral agreement must have been made prior to the Delaware litigation, which began in 2015.
This litigation commenced more than five years later, making Plaintiffs’ claim for the
enforcement of a separate oral agreement (Count III) untimely. But that does not end the
inquiry because Virginia law permits the revival of untimely claims under certain
circumstances.
Plaintiffs correctly assert that their otherwise untimely claims were revived under
Va. Code Ann. § 8.01-229(G)(1), which provides:
If any person against whom a right of action has accrued on any
contract, . . . promises, by writing signed by him or his agent, 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 acknowledgment in writing, from which a promise of
payment may be implied, shall be deemed to be such promise within the
meaning of this subsection.
Construing this language, Virginia courts have recognized, “[t]he acknowledgment from
which a promise may be implied need not be in any particular form or contain any particular
substance; it is sufficient if the debt is acknowledged as an existing one, and a liability or
11
This and other statutory provisions discussed have been amended in the time since
the underlying events described, but those amendments do not alter their applicability or
the length of the limitations period.
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willingness to pay it is inferable therefrom.” Nesbit v. Galleher, 5 S.E.2d 501, 503 (Va.
1939) (citation omitted) (construing predecessor statute).
We agree with Plaintiffs that this provision renders timely their claim that the
additional $1.2 million was an enforceable separate oral agreement. Pursuant to a court
order entered in the Delaware litigation, Defendants provided Plaintiffs with over 100
documents listing Defendants’ current “payables” via emails that were signed by
Defendants’ attorney. 12 The emails contained financial documents—entitled “Current
EagleForce [Associates’] Payables”—consisting of charts that repeatedly listed a “Personal
Loan (Campbell Personal)” “payable to” Richard Kay and a “Corporate Loan” “payable
to” Holdings. See, e.g., 324–25. These documents are unqualified acknowledgements of
indebtedness from which it can be lawfully inferred that Defendants intended to pay these
amounts. See Payable, Black’s Law Dictionary (11th ed. 2019) (“[A] sum of money . . .
that is to be paid”); Account Payable, Black’s Law Dictionary (11th ed. 2019) (“An account
reflecting a balance owed to a creditor.”). 13 Therefore, the emails providing these
documents revived Plaintiffs’ claims as to the alleged oral agreement. See Guth, 334 S.E.2d
12Defendants question whether their attorney’s signature on an email is sufficient
to satisfy § 801-229(g)(1)’s signature requirement, but they do not develop or provide any
support for this bald assertion. Thus, it is waived. See Grayson O Co. v. Agadir Int’l LLC,
856 F.3d 307, 316 (4th Cir. 2017) (“A party waives an argument by failing to present it in
its opening brief or by failing to develop its argument—even if its brief takes a passing shot
at the issue.” (cleaned up)).
13
The fact that the financial documents were sent pursuant to a court order does not
affect the inquiry. See Guth v. Hamlet Assocs., 334 S.E.2d 558, 566 (Va. 1985) (“Section
8.01-229(G) does not distinguish between ‘necessary’ and ‘gratuitous’ writings.”).
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at 566 (concluding that the defendants’ monthly status reports showing the balance of the
principal and interest remaining on the loan were “direct and unqualified admissions of
present, subsisting debts from which promises to pay would naturally and irresistibly be
implied”); 14 Ford v. Sweet, 297 S.E.2d 657, 660 (Va. 1982) (concluding that a letter
referencing the plaintiff’s debt was sufficient to revive the defendant’s claim such that
granting summary judgment to the plaintiff was appropriate). Because the last of these
emails was sent on June 1, 2020, Plaintiffs had three years from that date to bring any
claims regarding the separate oral agreement. Plaintiffs’ claims, brought on September 25,
2020, fall within that period.
Accordingly, regardless of whether the agreement as to the additional approximately
$1.2 million is considered a modification of the Note or a separate oral agreement,
Plaintiffs’ claims to recover that amount are not time-barred.
B. Liability
On the merits of Plaintiffs’ claims related to the additional $1.2 million it is alleged
that Kay lent, we conclude that the district court erred by granting summary judgment to
14
Defendants attempt to distinguish Guth because the defendants there did not deny
that the money given was a loan, as Defendants here do. But this distinction, if accurate, is
irrelevant. Va. Code Ann. § 801-229(G)(1) requires only that the defendant acknowledge
the loan at some point. It does not state that they have to presently admit to the loan. Indeed,
if there is “an unequivocal admission that the debt is still due and unpaid, unaccompanied
by any expression, declaration or qualification indicative of an intention not to pay, the
state of facts out of which the law implies a promise is then present, and the party is bound
by it.” Nesbit, 5 S.E.2d at 503 (citation omitted). Thus, Defendants’ attempt to distinguish
Guth falls flat.
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Plaintiffs for Defendants’ liability for the additional $1.2 million because there are genuine
disputes of material fact regarding both of Plaintiffs’ theories of recovery.
As noted, the district court granted summary judgment to Plaintiffs as to liability
without determining whether there was an oral modification of the Note or a separate oral
agreement governing the additional $1.2 million. The district court granted summary
judgment because it was satisfied that “there was something going on, some agreement.”
J.A. 3297. But confidence that “there was something going on” is not the standard for
granting summary judgment, which must be tethered to uncontested evidence supporting
liability under a specific legal claim. See Jacobs v. N.C. Admin. Off. of the Cts., 780 F.3d
562, 568 (4th Cir. 2015) (“Summary judgment cannot be granted merely because the court
believes that the movant will prevail if the action is tried on the merits.” (citation omitted)).
In addition to evidence that an agreement existed, there must be clear and convincing
uncontested evidence of the terms of that agreement. See Dean v. Morris, 756 S.E.2d 430,
433 (Va. 2014) (“Simply because the evidence is clear and convincing to prove that an oral
agreement existed . . . does not mean that the evidence is sufficient to prove the terms of
that agreement.”). “Without specificity of terms, there is no contract.” Id. And, here, there
are multiple disputes of fact regarding the terms of any agreement.
Beginning with the alleged separate oral agreement, there is a dispute of material
fact as to who the parties to the agreement are. On the one hand, Campbell stated that he
was personally liable for some part of the money Kay loaned and that “there was always a
mechanism to make [Kay] whole that [he] was a signatory on, all the way up to even now.”
J.A. 300. On the other hand, Defendants’ accounts payable records show that Campbell
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was personally liable for only $772,596.84—not the full amount Plaintiffs claim—and it
is unclear whether that figure includes the amount of the Note, is part of the additional $1.2
million, or is some part of each. Further, the Note was not signed by Campbell, which
contradicts Campbell’s statement that he was signatory under the referenced “mechanism
to make [Kay] whole.” J.A. 300. Moreover, as discussed above, Plaintiffs denied
Campbell’s personal liability in the Delaware proceedings and even characterized
Campbell’s attempt to repay part of the loan as “subterfuge.” J.A. 2116. At the very least,
this demonstrates material disputes of fact regarding whether Campbell was party to any
separate agreement and, if so, in what capacity.
A dispute also exists as to whether Associates is a party to the alleged subsequent
oral agreement. Associates’ accounts payable records indicate only that Associates is liable
for $1,147,254.94—$700,000 of which ostensibly relates to the Note. The evidence does
not undisputedly establish for purposes of summary judgment therefore that Associates
was party to an agreement to repay the additional $1.2 million transferred.
Additionally, there are disputes regarding other terms of any subsequent oral
agreement. For example, Plaintiffs suggest that the agreement was subject to the same
terms as the original Note because Campbell stated that the Note “was executed with the
anticipation that any additional monetary contributions from Kay would be subject to the
same terms and conditions as the original loan.” J.A. 71 (emphasis added). However,
Campbell never stated that the parties’ “anticipation” was reflected in their actual conduct,
leaving the actual terms of the agreement uncertain and in dispute. Therefore, there are
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multiple material disputes of fact preventing summary judgment on Plaintiffs’ claim for
the additional approximately $1.2 million under the alleged separate oral agreement.
The material facts are also in dispute regarding Plaintiffs’ allegation that the parties
orally modified the Note. When the district court asked Plaintiffs to point to anything that
demonstrated a modification of the Note, Plaintiffs pointed only to Campbell’s statements
in the Delaware litigation. But those statements do not indisputably show a modification.
For example, Campbell’s interrogatory response states broadly that he “entered into an
agreement to borrow money from Richard Kay and/or his affiliates.” J.A. 71. Campbell
neither specified what that agreement entailed nor acknowledged a particular modification.
At a minimum, this demonstrates that there is a dispute of material fact as to whether a
modification of the Note occurred.
Accordingly, we will vacate the district court’s grant of summary judgment and
remand to the district court for further proceedings as may be appropriate. 15
C. Damages
In addition to there being a dispute about who is liable under the alleged oral
modification or agreement, there is a dispute of material fact as to the amount Plaintiffs
lent Defendants over and above the original $700,000 covered by the Note (for which we
15
Defendants also argue that the district court’s decision was legally inconsistent
because there cannot be both an oral modification of the Note and a separate oral agreement
covering the additional $1.2 million. We disagree. The parties could have chosen to
effectuate their agreement via both an oral modification of the Note and a separate, parallel
oral agreement. That the two agreements could be redundant does not necessarily make
them legally inconsistent.
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have held above that Associates is liable and that a question of fact exists as to additional
parties’ liability). The district court erred in granting summary judgment when the record
evidence contained multiple potential amounts loaned by Plaintiffs and there is a further
question as to which of the Plaintiffs is a proper creditor for any specific amount.
As Plaintiffs accurately note, consistent with the district court’s finding of a total
liability of $1,919,853.78, many of Defendants’ financial documents—created after Kay
stopped transferring money—state that one or all of Defendants owed Kay and Holdings a
total of either $1,919,851.78 or $1,919,853.78, with no explanation of the $2 difference.
See, e.g., J.A. 313, 318. Under certain circumstances, the district court may not have clearly
erred in concluding that a difference of a couple dollars was immaterial. But that wasn’t
the only record evidence as to the sum lent. Some of Defendants’ documents also provide
that Defendants owed Plaintiffs thousands of dollars less: for example, some list
$1,737,008.16. J.A. 597. Further, Plaintiffs argued before the district court that they
actually loaned Defendants tens of thousands of dollars more: $1,949,813.59. J.A. 868.
And while Plaintiffs asserted that Defendants judicially admitted to receiving
$1,917,851.78 in this litigation, that assertion is inaccurate. Plaintiffs relied on Defendants’
responses to interrogatories that asked Defendants to “[i]dentify each advance of funds that
comprise the $770,596.84[] ‘Personal Loan (Campbell Personal)’ owed to ‘Richard Kay
Personal’” and the “$1,147,254[.]94 ‘(Corporate Loan)’ owed to [Holding]” that
Defendants had listed in their accounts payable. J.A. 3335–36. Defendants responded with
charts listing each payment they received. J.A. 3339–43. Under Plaintiffs’ theory, the total
of the payments included in the chart should amount to $1,917,851.78 (770,596.84 +
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1,147,254.94), but the payments shown actually add up to only $1,895,341.78. The
interrogatory response therefore provides yet another possible principal amount and
contradicts Plaintiffs’ contention that Defendants judicially admitted to receiving
$1,917,851.78. Thus, there are clear disputes of fact as to the amount of money Plaintiffs
loaned Defendants, assuming there is underlying liability.
Because there is evidence supporting different principal amounts and because, as
discussed, there are disputes regarding which Plaintiff lent the money and which
Defendants are liable for repaying it, a determination of the rightful payees and damages
is best left to trial. Accordingly, we vacate the district court’s damages determination and
remand the issue for determination in a further proceeding.
V. Interest Accrual Date
On cross-appeal, Plaintiffs argue that the district court erred by determining at the
bench trial that interest did not begin to accrue on the money lent until September 3, 2020,
five days after Plaintiffs demanded repayment. We begin with a summary of the Note’s
terms and the relevant district-court proceedings.
As discussed, the Note provides that interest would commence “on the date of
default,” which occurred if payment of the principal amount was not made five days “after
its due date.” J.A. 63. The present dispute stems from the fact that there are two possible
due dates provided in the Note.
The Note’s first possible due date is based on its language stating that the
“Borrower” “promise[s] to pay to the order of [Kay], upon demand, the principal sum of
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Seven Hundred Thousand Dollars.” J.A. 63 (emphasis added). Plaintiffs demanded
payment on August 28, 2020. Under this interpretation, interest started to accrue on
September 3, 2020.
The second possible due date relies on a provision titled “Repayment,” in which the
Note also declares that “[t]he entire Principal Amount shall be repaid exactly three (3)
months after the date” the Note was executed. J.A. 63. Because the Note was executed on
July 7, 2014, per the “Repayment” provision, repayment was due on October 7, 2014. If
this provision governs, then interest began accruing five days later, on October 12, 2014.
At the outset of this litigation, Plaintiffs’ Amended Complaint alleged that “[t]he
parties agreed to orally modify the Note’s Due Date to make the entire balance of the Note
due upon written demand.” J.A. 51; see also J.A. 57 (stating that the parties “orally and by
course of conduct modified the terms of the Note . . . to extend the due date for
repayment . . . from a date certain to payment on demand”).
After the district court granted summary judgment to Plaintiffs and determined the
principal amount, the parties proceeded to trial on the issue of when interest began to
accrue. Plaintiffs’ sole argument in their briefing prior to the bench trial—notwithstanding
their above allegations in the Amended Complaint—was that the Note provided that
interest would accrue on October 12, 2014, and the district court should enforce that plain
language. Defendants responded that the Note actually stated that payment was due upon
demand, and also asserted that Plaintiffs should be held to their concession in their
Amended Complaint that the Note was modified such that payment was due upon demand.
Defendants did not separately argue that there was a modification or discuss the
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prerequisites for finding a modification; they simply asked the district court to hold the
Plaintiffs to their pleading concession. At trial, both parties focused their arguments on the
plain language of the Note, but Defendants again asserted that the court should enforce
what they deemed Plaintiffs’ concession. For their part, Plaintiffs stated that they withdrew
the Amended Complaint modification allegation during discovery after determining that
they could not prove that the parties modified the Note’s due date.
Soon after the trial began, the district court stated that it would “cut to the chase,”
J.A. 3459, explaining that it was “looking at” the parties’ “course of conduct . . . to
determine what was really going on here.” J.A. 3460. The district court found that “the note
says what it says, but that’s not how the parties conducted themselves.” J.A. 3461. It
explained that Kay denied the existence of the loan in the Delaware litigation and failed to
ask Defendants to pay back the loan because “it would have undercut [his] litigation
position in Delaware . . . because [he couldn’t] have it both ways.” J.A. 3460. Additionally,
the district court stated, “I think that a plaintiff does have to be held to the allegations that
the plaintiff makes in a complaint” because they are “representation[s] to the Court.” J.A.
3461. As such, the court concluded that payment was due upon demand and interest began
to accrue five days thereafter, on September 3, 2020.
We pause here to explain that on appeal the parties disagree as to what exactly the
district court found regarding the due date and their threshold disagreement on that matter
affects the framing of their arguments. Plaintiffs believe the district court accepted their
reading of the Note—that interest started to accrue three months and five days after the
Note was executed, October 12, 2014—but found that the parties subsequently modified
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the Note as evidenced by their course of conduct. See Opening–Response Br. 59 (“Without
making any finding that the terms of the Note were ambiguous as to the interest
commencement date, the court nonetheless found that the parties’ ‘course of conduct’
overrode the explicit terms of the Note regarding commencement of interest.”).
Defendants, however, contend that the district court accepted Defendants’ reading of the
Note and found that the plain language of the Note provided that interest began to accrue
five days after Plaintiffs demanded repayment, as confirmed by their course of conduct
during the Delaware litigation. See Response–Reply Br. 34 (“As the district court correctly
found, the parties conducted themselves to give effect to the ‘upon demand’ language and
not the 90-day language.”). Neither understanding fully and accurately represents the
court’s statements.
Our review of the trial transcript reveals that the district court found that the plain
language of the Note specified that interest would begin on October 12, 2014, three months
and five days after the Note was executed. Despite that finding, the court also concluded
that Plaintiffs made a judicial admission in their Amended Complaint that the parties
agreed to subsequently modify that provision of the Note such that payment was due upon
demand and interest would commence five days thereafter. Finding some support in the
record for that admission—namely, Kay’s complete denial of the loan in the Delaware
litigation—the district court held Plaintiffs to it.
With that understanding of the district court’s opinion, we turn to the parties’
arguments, which have two aspects—(1) the Note’s plain language and (2) modification of
that language. The parties first contend that their interpretation of the Note governs. To
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support their position, Plaintiffs rely on the Note’s language providing that payment was
due “exactly three (3) months” after the Note’s execution. J.A. 63. For their part,
Defendants point to language that states that payment was due “upon demand.” J.A. 63.
The Note undoubtedly contains conflicting language about its due date, but we need not
determine whose interpretation is correct. In the end, the controlling question is whether
Plaintiffs judicially admitted that, assuming their interpretation is correct and payment was
due on a specific date, the parties modified the Note to make payment due on demand.
Accordingly, we turn to the parties’ arguments regarding whether they modified the
Note—which we assume provided that payment was due three months after the Note’s
execution—to delay interest accrual until Plaintiffs demanded repayment. Plaintiffs,
misinterpreting the district court’s findings, assert that the district court erred by finding
that the parties modified the Note because Defendants did not demonstrate the prerequisites
for making such a finding. Defendants do not directly engage the Plaintiffs’ modification
argument and instead rely on their own misunderstanding of the district court’s threshold
factual findings to rebut Plaintiffs’ arguments. Specifically, they respond that the district
court correctly determined that the plain language of the Note provides that interest did not
begin to accrue until Plaintiffs demanded repayment.
As noted, Plaintiffs focus their arguments on the requirements for proving a
modification. But the district court did not base its decision on such a finding, nor did it
undertake any of the salient modification analysis. Moreover, Defendants never sought to
prove a modification of the Note, they simply asked the court to enforce Plaintiffs’
admission in their Amended Complaint that the parties modified the Note. Consistent with
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the parties’ arguments, the district court chose to enforce the judicial admission. So, that’s
the decision we review on appeal, not Plaintiffs’ immaterial arguments about modification.
“A judicial admission is a representation that is ‘conclusive in the case’ unless the
court allows it to be withdrawn.” Minter v. Wells Fargo Bank, N.A., 762 F.3d 339, 347 (4th
Cir. 2014) (citation omitted). Judicial admissions generally “go to matters of fact which,
otherwise, would require evidentiary proof.” Everett v. Pitt Cnty. Bd. of Educ., 788 F.3d
132, 141 (4th Cir. 2015) (citation omitted). They can also consist of “intentional and
unambiguous waivers that release the opposing party from its burden to prove the facts
necessary to establish the waived conclusion of law.” Id. (quoting Minter, 762 F.3d at 347).
“A purported judicial admission is binding only if the statement is ‘deliberate, clear, and
unambiguous.’” Id. (quoting Minter, 762 F.3d at 347). “We review the district court’s
determination as to whether a particular statement constituted a judicial admission for
abuse of discretion.” Minter, 762 F.3d at 347 (cleaned up).
Under these principles, we conclude that the district court did not abuse its
discretion by holding Plaintiffs to their judicial admission. Plaintiffs’ admission was
deliberate, clear, and unambiguous. They stated multiple times in their Amended
Complaint that the parties modified the Note such that payment would not be due until
demand. See J.A. 51, 57. They even asserted that demand was a “condition precedent” for
Defendants’ liability on the Note. J.A. 56. 16
16
Although Plaintiffs stated in the district court that they withdrew those allegations,
they do not make such an argument on appeal nor do they point to any evidence of such a
withdrawal, much less that the district court accepted it.
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Of course, the district court could have relieved Plaintiffs of their judicial admission
if it found that Plaintiffs’ admission was clearly untrue. See New Amsterdam Cas. Co. v.
Waller, 323 F.2d 20, 24 (4th Cir. 1963) (“[A] court, unquestionably, has the right to relieve
a party of his judicial admission if it appears that the admitted fact is clearly untrue and
that the party was laboring under a mistake when he made the admission.”). But the district
court plainly found that the admission was accurate and supported in the record, repeatedly
stating that the parties’ course of conduct suggested that they had orally modified the Note
to make payment due upon demand. In particular, the court relied on the fact that Kay
repeatedly denied the existence of the loan and in so doing, could not have simultaneously
been collecting interest on it.
And we cannot say that the district court’s finding was clearly erroneous because it
was a plausible account of the evidence. See Everett, 788 F.3d at 145 (“If the district court’s
account of the evidence is plausible in light of the record viewed in its entirety, then we
must affirm.” (cleaned up)); id. (“A finding is clearly erroneous when, although there is
evidence to support it, on the entire evidence the reviewing court is left with the definite
and firm conviction that a mistake has been committed.” (citation omitted)). As there is no
evidence that the district court acted in an arbitrary manner, committed an error of law, or
relied on erroneous factual or legal premises, we conclude that the district court did not
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abuse its discretion in relying on Plaintiffs’ judicial admission that the Note was modified
to be due on demand. 17
Accordingly, we affirm the district court’s finding that interest did not begin to
accrue on the Note until September 3, 2020—five days after Plaintiffs demanded payment.
Importantly, this conclusion does not apply to the additional $1.2 million, as the district
court must still determine the legal basis for liability in the first instance. Once the district
court sorts out how much money Plaintiffs lent outside of the Note, under what terms, who
is liable for repaying that money, and to whom they are liable, it can determine whether
and when interest began accruing on that amount.
VI. Conclusion
For the foregoing reasons, we affirm the district court’s grant of summary judgment
for Associates’ liability to Kay under the Note. We similarly affirm the district court’s
judgment that interest on the Note began to accrue on September 3, 2020 because the due
date was modified orally. However, we vacate the district court’s grant of summary
judgment to Investments and Holdings under the Note and its grant of summary judgment
to all Plaintiffs on Campbell’s personal liability under the Note and on Defendants’ liability
for the additional $1.2 million. We also vacate the court’s damages determination. We
17
While Plaintiffs argue on appeal that Defendants should not be able to rely on
their concession because Defendants denied Plaintiffs’ modification allegation in their
answer, Plaintiffs failed to bring this argument before the district court. That argument was
therefore forfeited, and we need not address it further. See Lansdowne on the Potomac
Homeowners Ass’n, Inc. v. OpenBand at Landsdowne, LLC, 713 F.3d 187, 206 (4th Cir.
2013).
37
USCA4 Appeal: 22-1497 Doc: 50 Filed: 06/06/2023 Pg: 38 of 38
remand this case to the district court for further proceedings in accordance with this
opinion.
AFFIRMED IN PART, VACATED
IN PART, AND REMANDED
38