Académique Documents
Professionnel Documents
Culture Documents
No. 11-1618
Appeal from the United States District Court for the Eastern
District of Virginia, at Alexandria.
Claude M. Hilton, Senior
District Judge. (1:10-cv-00731-CMH-JFA)
Argued:
Decided:
PER CURIAM:
Bank
of
association
Carolina,
America,
with
brought
N.A.
its
this
(the
Bank),
principal
place
action
against
of
national
business
Christopher
banking
in
North
Sands,
The case
Bank
district
appeals
court
this
that
ruling.
Because
reasonable
jury
we
agree
would
have
with
the
lacked
I.
Given the procedural posture of this appeal, we view the
evidence in the light most favorable to the Bank and draw all
reasonable
inferences
from
that
evidence
in
its
favor.
See
The
Sands
was
the
founder,
co-owner,
and
chief
executive
Because he
that
perseverance
contained
paid
noncash
off,
and
components.
on
July
Ultimately,
1,
2008,
MB
this
Security
effectuating
this
purchase,
MB
Security
used
loan
depending
on
the
level
of
AC
Technologys
accounts
as
increased,
the
so
value
did
the
of
AC
Technologys
amount
that
MB
accounts
Security
receivable
could
borrow,
This loan
Most pertinent to
(ARA)
summaries.
These
ARA
summaries
listed
AC
An account
satisfy
the
Banks
requests
for
accounts
receivable
Byrd
and Munns then sent ARA summaries to the Bank, which understood
them to be receiving their information from Sands.
Also, based
gross
accounts
receivable
availability
number,
supplying
information
about
AC
Technologys
accounts
receivable to Byrd and Munns, Sands knew what did and did not
constitute
Technology,
an
account
he
receivable.
actively
Prior
participated
to
in
the
sale
of
maintaining
AC
the
That said,
it
was
never
Sandss
practice
to
verify
whether
orders
had
shipped as planned.
Sands also appreciated that the Bank would rely upon the
financial information he provided Byrd and Munns in its loan
decisions.
Munns
to
were
supply
the
Bank
with
the
accounts
receivable
its
loan
decisions
at
least
in
part
on
the
accounts
attached.
Among
the
specific
accounts
receivable
Sands had
requested that the vendor for the MPO purchase ship the product
earlier in the day and, as was customary for him, listed it as
an account receivable without verifying that the product had
actually shipped.
In any event, at
the time Sands sent this ARA summary, neither the MPO purchase
nor the GD purchase had in fact shipped.
6
But this ARA summary was not the same ARA summary that
the
total
$163,709.13,
Byrds
$4,469,509.13.
MPO
account
worth
of
the
summary
GD
listed
account
its
receivable
total
worth
as
as
receivable
with
total
worth
of
$2,007,460.66,
amounts
for
the
total
worth
of
AC
Technologys
Nothing at trial
Byrd sent the Bank a BBC that listed the total amount of AC
Technologys accounts receivable as $9,649,523.
The Bank, in
GD accounts receivable, the Bank would not have issued the loan
to
cover
the
purchase
price
because
there
would
have
been
The closing for the loan took place on June 30, 2008.
That
insufficient collateral.
The
forwarded
material
in
the
body
of
the
mentioned that the MPO purchase would not ship until mid-July.
According
to
Sands,
because
he
was
busy
preparing
for
the
closing, he did not read the e-mail that morning and it was not
until the following day that he discovered the MPO order had
failed to ship.
Munns an e-mail from the same account to which Ford sent the email regarding the expected shipment date for the MPO purchase.
Sands attached an ARA summary and informed them that it was the
A/R as of 8:30 am this morning June 30, 2008.
But again,
Of this $5.5
The
brought
lawsuit
against
Byrd
alleging
fraud.
The
Byrd
The
complaint alleged that Britt was an attorney and current coowner of AC Technology who, on behalf of himself, Byrd, and
Munns,
negotiated
and
entered
into
the
purchase
and
sale
misrepresentation,
constructive
10
fraud,
common
law
insufficient
evidence
to
send
the
case
to
the
jury.
relating
shipped,
meaning
to
the
that
MPO
and
he
did
GD
purchases
not
had
make
not
yet
knowing
The
court also determined that the Bank did not rely on Sandss
representations in determining the amount of credit to extend
but
instead
relied
on
the
altered
information
that
Byrd
and
II.
We
review
de
novo
district
courts
order
granting
only
if,
after
the
party
has
been
fully
heard
on
our
citizenship,
jurisdiction
we
apply
in
the
case
substantive
rests
law
on
of
Moreover,
diversity
Virginia.
of
See
S.E.2d
387,
390
1994).
To
prove
actual
fraud,
Id.
to
claimants
sustain
claims
of
constructive
fraud,
Similarly,
must
resulting
in
damage
to
the
one
relying
on
it.
each
evidence.
element
of
the
claim
by
clear
and
convincing
Thompson
v.
Bacon,
425
S.E.2d
512,
514
(Va.
begin
representations
falsely
by
of
recognizing
material
represented
to
facts.
Byrd
and
most
favorable
to
that
the
As
Munns
Sands
the
Bank
that
the
made
false
asserts,
he
MPO
GD
and
Bank,
established
that
these
purchases had not yet shipped and therefore could not properly
be listed as accounts receivable.
value
of
AC
Technologys
accounts
13
receivable
And because
drove
the
amount
of
the
loan
that
the
Bank
would
extend,
these
false
to
provide
evidence
on
which
reasonable
jury
could
actual
and
constructive
fraud,
claimants
must
For
prove
See
346-47
(Va.
1998).
The
Bank
points
to
Sandss
ARA
it
relied
on
the
inflated
value
of
AC
Technologys
to
information
raise
to
the
Bank.
the
Instead,
value
of
AC
Byrd
altered
Technologys
Sandss
accounts
Thus,
it
was
Byrds,
not
Sandss,
false
representations
that
evidence
the
upon
Bank
which
constructive fraud.
failed
to
reasonable
provide
jury
legally
could
sufficient
find
actual
or
by
clear
and
convincing
evidence
that
Sands
had
the
III.
For these reasons, we affirm the judgment of the district
court.
AFFIRMED
15