Fox v. Encounters Intl ( 2006 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 05-1139
NATALIYA MIKHAYLOVNA FOX,
Plaintiff - Appellee,
versus
ENCOUNTERS INTERNATIONAL; NATASHA SPIVACK,
Defendants - Appellants,
and
JAMES M. FOX, II,
Defendant,
IRENA LIEBERMAN; DENNIS SCHEIB; TAHIRIH
JUSTICE CENTER; DEPARTMENT OF HOMELAND
SECURITY, Citizenship and Immigration
Services,
Parties in Interest.
No. 05-1404
NATALIYA MIKHAYLOVNA FOX,
Plaintiff - Appellee,
versus
ENCOUNTERS INTERNATIONAL; NATASHA SPIVACK,
Defendants - Appellants,
and
JAMES M. FOX, II,
Defendant,
IRENA LIEBERMAN; DENNIS SCHEIB; TAHIRIH
JUSTICE CENTER; DEPARTMENT OF HOMELAND
SECURITY, Citizenship and Immigration
Services,
Parties in Interest.
Appeals from the United States District Court for the District of
Maryland, at Greenbelt and Baltimore. William D. Quarles, Jr.,
District Judge. (CA-02-1563-WDQ)
Argued: March 15, 2006 Decided: April 13, 2006
Before LUTTIG and SHEDD, Circuit Judges, and HAMILTON, Senior
Circuit Judge.
Affirmed by unpublished per curiam opinion.
ARGUED: Paul Howard Zukerberg, Washington, D.C., for Appellants.
Randall K. Miller, ARNOLD & PORTER, L.L.P., Washington, D.C., for
Appellee. ON BRIEF: David M. Orta, Ross S. Goldstein, ARNOLD &
PORTER, L.L.P., Washington, D.C., for Appellee.
Unpublished opinions are not binding precedent in this circuit.
See Local Rule 36(c).
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PER CURIAM:
This is a tort case brought by a Ukranian woman, under
Virginia law, against an international matchmaking agency
headquartered in Maryland and also against such agency’s founder
and sole owner. As a recruit of the agency, plaintiff was matched
for marriage with an American citizen who began mentally abusing
her only two months after the couple married and began physically
abusing her approximately five months after the couple married.
The case went to trial before a jury on various tort theories, and
the jury found in favor of the plaintiff on all claims, awarding
her $92,000 in compensatory damages and $341,500 in punitive
damages. The international matchmaking agency and its founder have
appealed with respect to all claims. We affirm.
I.
The defendants are Encounters International (EI) and Natasha
Spivack (Spivack) (collectively the Defendants).1 EI is a Maryland
corporation with offices in Rockville, Maryland; Moscow, Russia;
Yaroslavl, Russia; and Kiev, Ukraine. American male clients of EI
pay a membership fee of $1,850 plus additional fees for various
1
Because the defendants/appellants are asking us, inter alia,
to reverse the district court’s denial of their motion for judgment
as a matter of law filed pursuant to Federal Rule of Civil
Procedure 50(b), we consider the evidence in the light most
favorable to the plaintiff. Reeves v. Sanderson Plumbing Prods.,
Inc., 530 U.S. 133 (2000); Bryte v. American Household, Inc., 429
F.3d 469, 475 (4th Cir. 2005).
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matchmaking services. At all times relevant to this case, EI
distinguished itself from other matchmaking agencies by claiming a
95% success rate with matches and claiming to establish a personal
relationship with each woman who joined. EI uses its 95% success
rate as one of its core marketing tools.
In April 1998, in Kiev, EI introduced then Nataliya Derkach
(Plaintiff) to EI member Geoffrey Hermesman (Hermesman). For a fee
paid to EI by Hermesman, EI contacted Plaintiff, who was then a
member of the Wind of Wanderer matchmaking agency. Then,
consistent with representations on EI’s website, EI assisted
Hermesman in bringing Plaintiff to the United States, including by
telling Plaintiff how to complete immigration paperwork to gain
entry into the United States.2 Indeed, EI’s website states:
There is immigration paperwork that we will help your
woman to complete while you are still in Moscow or Kiev.
Step by step we’ll guide you and your fiance[e] through
the bureaucratic hurdles of the immigration process
. . . at no extra charge.
(E.A. 17).
When Hermesman and Plaintiff decided not to pursue a
relationship two weeks after she arrived in the United States,
Defendants induced Plaintiff to remain an EI member and introduced
her to EI member James Fox. EI’s website contained Spivack’s
2
Plaintiff officially joined EI at some point and, according
to the EI website, EI posted her picture in its database of
recruits.
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following description of the events leading to Defendants’
introduction of Plaintiff to James Fox:
Although I introduced James Fox of Virginia and Natalia
Derkach from Kiev a few days before they came to EI
Saturday Club, I believe that this event solidified their
mutual attraction. A couple of months ago James was
briefly engaged to another EI woman client from Kiev but
that relationship did not feel right for either one of
them when this woman came to the United States. More
mature of the two of them James was determined to work
out the differences; therefore he was very disappointed
when Lena decided to leave for the Ukraine after a couple
of weeks together in order to remain “just friends.”
Natalia’s story was not a happy one either. She came as
a fiancee of one of EI clients who did not feel that she
was the right woman for him after spending with her one
day in Kiev and a couple of weeks in Virginia. By pure
accident she missed the plane which would have taken her
back to Kiev. Trying to calm her down when she was
crying in my office I told her that I’ll introduce her to
other EI clients. “They are the most serious about
commitment and family, financially and mentally stable,
they are not cheap -- the horror stories about cheap
Americans do not apply to EI clients -- they are the best
of the best single men on the ‘market’ -- I told her --
because they joined EI showing their trust that we have
the best women like you. Don’t worry, you are in the
right place to be and I’ll take care of you.” Natalia
raised her big, red from tears eyes at me and smiled with
appreciation.
(E.A. 31-32).
During the trial in this case, Plaintiff testified as follows
regarding Spivack’s representations to her about James Fox:
Well, James was the best man. He was her favorite
client. He was very good. She said that he will be so
good that I was so lucky that I was there at that time,
because otherwise he would be married to that other
woman, and I would never knew [sic] about him. She said
that she has her favorite other client who [was] going to
come from some picture book and she is planning to
introduce James, but now that -- of course if I’m with
him, then of course she wouldn’t, but she says that he’s
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her best client, he’s the youngest client, and he’s -- he
has everything. He is ready. He’s ready to settle down
to -- he just need[s] a good wife.
(J.A. 1946). According to Spivack, EI’s screening process of its
male clients consists of her interviewing the male client about his
expectations and why previous romantic relationships had failed.
Spivack, on behalf of herself and EI, spoke to Plaintiff in
her native tongue and undertook to advise her about many matters
including American customs and legal requirements, relationship
counseling, prenuptial agreements, and the qualities of the male
client to whom EI was introducing her. At all times relevant to
this case, Defendants knew that Plaintiff was a Ukrainian national
who was unfamiliar with the language, laws, and customs of the
United States. Defendants also expressly held themselves out on
EI’s website as relationship counselors:
If you ever need someone to talk to, we’ll be available
to advise you . . . or her . . . with any suggestions for
adjusting to your new life together.
(E.A. 17). EI links its counseling services to its 95% success
rate.
Just two months after James Fox and Plaintiff were married in
November 1998, James Fox began to subject Plaintiff to emotional
abuse. Such abuse began with small instances of cruel name calling
and escalated over time to his angrily throwing a cooked potato
past her head and smashing a full glass of Pepsi Cola against the
kitchen wall when Plaintiff refused to drink from it after he had
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spit in it, all resulting in Plaintiff being in an increasingly
terrorized state.
In May 1999, James Fox began to physically abuse Plaintiff by
chasing her into a bedroom closet, pinning her against the wall,
screaming loudly in her ear that she is a stupid idiot, and then
biting her finger so hard that her finger showed bite and bruise
marks for two weeks. Over time the physical abuse escalated. For
example, on the evening of December 29, 1999, James Fox threw
Plaintiff, then four months pregnant, on the bed, violently grabbed
her leg with both hands in his expressed attempt to break it, and
hit Plaintiff in the face causing her lip to bleed when she
screamed in pain about her leg.
On three separate occasions, once in January 2000, once in
March 2000, and once in April 2000, Plaintiff sought Spivack’s
counseling and advice with regard to the violent physical and
mental abuse that she was suffering at the hands of James Fox.
Plaintiff had occasion to be in the presence of Spivack during
these times because Plaintiff and James Fox attended the monthly
social event that Spivack hosted for EI clients and married couples
who met through EI. For example, during the January 2000 social,
Plaintiff told Spivack about the evening of December 29, 1999;
specifically that James Fox had beaten her and terrorized her while
pregnant, leaving her with a busted lip and bruises, and that she
was so afraid of him beating her again that once he left the
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apartment for a while, she fled on foot and spent the entire night
in a nearby Wal-Mart. At the April 2000 social, Plaintiff
specifically told Spivack that James Fox was becoming increasingly
abusive and had chased her with a broken piece of glass, put it on
her neck, and then told her he hated her, causing her to be “really
scared.” (J.A. 1126).
In response to Plaintiff’s repeated reports of abuse and
request for advice, Spivack always minimized the abuse Plaintiff
suffered, advising her that it was nothing to worry about. With
respect to the December 29th beating specifically, Spivack advised
Plaintiff that “‘All Americans--all American men are crazy.’”
(J.A. 1123). Spivack continued: “‘Maybe you just listen to him,
and do what he says.’” Id. Spivack repeatedly advised Plaintiff
that she had only two options, work things out with James Fox or be
deported back to the Ukraine. Based upon this advice, Plaintiff
remained in the marriage and awaited the birth of her daughter.
On July 6, 2000, approximately three weeks after Plaintiff
gave birth to her daughter Sophia, James Fox subjected Plaintiff to
a final violent episode. Specifically, James Fox physically and
verbally abused Plaintiff for approximately two hours, including
threatening to kill her while holding a gun to her head. Shortly
thereafter, Plaintiff called an ambulance because of severe chest
pain. The ambulance took Plaintiff to the local hospital where she
was treated by Air Force Lt. Col. Marilyn Perry, M.D. Plaintiff
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had numerous physical injuries including contusions and swelling on
her face; hand marks on her arms (indicating that she was violently
grabbed and/or shaken); a human bite to her hand; and contusions on
her chest. Dr. Perry -- board certified with substantial
experience with domestic abuse -- also testified that it was clear
to her that Plaintiff had been terrorized and was a victim of
domestic abuse.
Immediately after leaving the hospital, Plaintiff and her baby
moved into a battered women’s shelter at the urging of the hospital
staff. With one minor exception, Plaintiff and her newborn baby
lived at that shelter for seven months from July 2000 through
January 2001. The minor exception was when Plaintiff and her baby
stayed for a short time in a house on property owned by James Fox.
Plaintiff and her daughter moved back to the shelter because the
house was not appropriate for her or her baby. In early 2001,
James Fox obtained a divorce of Plaintiff in Haiti.
At trial, Plaintiff’s mental health counselor, Rebecca
Hamilton, and Giselle Hass, Psy.D., testified about the significant
psychological injuries that Plaintiff suffered as a result of the
abuse. Such injuries required Plaintiff to undergo professional
counseling for seven months.
Once safe at the battered women’s shelter, Plaintiff for the
first time learned about the battered spouse waiver. In general,
the battered spouse waiver allows an alien who validly resides in
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the United States based solely upon the sponsorship of her United
States citizen spouse to leave an abusive relationship with such
spouse without fear of being immediately deported. 8 U.S.C.
§§ 1154, 1229b(b)(2). On April 2, 2001, Plaintiff petitioned for
a battered spouse waiver, which the Immigration and Naturalization
Service (INS) granted on May 29, 2001. There was no appeal.
Subsequently, Plaintiff petitioned for adjustment of status as a
permanent resident of the United States, which petition was
granted.3 Plaintiff currently lawfully resides in Virginia and is
employed as a civil engineer.
The record is undisputed that Spivack knew about the battered
spouse waiver during the times that Plaintiff had confided in her
about the physical and mental abuse that James Fox inflicted upon
her. The record is also undisputed that Spivack, nor any other
agent or employee of EI, ever informed Plaintiff about the battered
spouse waiver. Notably, at all times relevant to this case, EI was
governed by the Mail Order Bride Act (MOBA), 8 U.S.C. § 1375. As
part of this 1996 legislation, Congress found that there was a
heightened risk of domestic abuse in relationships formed by
international matchmaking agencies and that women who used such
services are “unaware or ignorant of United States immigration
3
The Department of Homeland Security appealed the IJ’s grant
of Plaintiff’s petition to adjust her status on the ground that she
initially filed improper immigration forms shortly after her
marriage to James Fox. The Board of Immigration Appeals affirmed,
without opinion, on March 21, 2005.
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law.” 8 U.S.C. § 1375(a). MOBA required that “[e]ach
international matchmaking organization doing business in the United
States shall disseminate to recruits, upon recruitment, such
. . . information as the [INS] deems appropriate, . . . including
information regarding . . . the battered spouse waiver.”4 8 U.S.C.
§ 1375(b)(1) (emphasis added).
Finally, the record is undisputed that EI’s website featured
Plaintiff’s name and likeness throughout the relevant time period,
including through trial. Defendants used Plaintiff’s name and
likeness to portray her as a happy and satisfied customer even
after Defendants had actual knowledge that James Fox physically and
mentally abused Plaintiff and that Plaintiff was decidedly not a
happy customer. Indeed, Defendants placed a picture of Plaintiff
taken when she was either six or seven months pregnant (taken in
4
We note that on January 5, 2006, President George Bush signed
into law the “International Marriage Broker Regulation Act of
2005,” H.R. 3402, Public Law No. 109-162, Title VIII, Subtitle D,
with an effective date of March 6, 2006. The new law seeks to
extensively regulate the international matchmaking industry. Among
other things, it requires all United States citizens who petition
for a fiancee or spousal visa to provide more personal background
information to United States Immigration Officials and the State
Department than ever before. 8 U.S.C. § 1375a. The new law also
puts significant obligations on international matchmaking agencies
to investigate the background of its clients. For example, such
agencies will be required to search the National Sex Offender
Registry or State sex offender public registry for the names of its
United States clients. 8 U.S.C. § 1375a(d)(2)(A)(I).
Notably, the law repeals 8 U.S.C. § 1375. Pub. L. 109-162,
Title VII, § 833(g). However, the repeal does nothing to affect
the issues before us on appeal.
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March or April 2000) on the EI website. It is undisputed that EI
never obtained written consent as required by the relevant Virginia
statute to place any of these pictures on its website. Virginia
Code § 8.01-40(A).
Plaintiff subsequently sued Defendants and James Fox in the
United States District Court for the District of Maryland. James
Fox settled with Plaintiff for $115,000. Plaintiff’s claims
against the Defendants went to trial before a jury on November 8,
2004. The jury considered the following claims against Defendants:
(1) actual or constructive fraud under Virginia common law; (2)
deceptive and unfair trade practices under Virginia statutory law;
(3) unauthorized appropriation of name and likeness under Virginia
statutory law; (4) negligence/breach of fiduciary duty under
Virginia common law; and (5) defamation under Virginia common law.5
Defendants had two counterclaims: (1) actual or constructive fraud
under Virginia common law; and (2) conspiracy to injure business
under Virginia common law.
5
The defamation claim was based upon Spivack’s telling other
EI clients during the course of this litigation that Plaintiff had
been convicted of drug crimes in the Ukraine and Turkey. During
discovery in this case, James Fox produced what the governments of
Ukraine and Turkey have certified are counterfeit criminal records.
Defendants defended against the defamation claim on the ground that
they had a reasonable belief that the documents were authentic. In
response, Plaintiff argued that given the fact that James Fox was
being criminally charged with domestic abuse and had a huge
incentive to discredit his wife, Defendants were unreasonable in
telling third parties that Plaintiff had been convicted of drug
crimes in the Ukraine and Turkey.
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Defendants moved for judgment as a matter of law pursuant to
Federal Rule of Civil Procedure 50 at all appropriate times. The
district court denied the motions.
The trial ended on November 18, 2004. After considering all
of the evidence, the jury found in favor of Plaintiff on all claims
and awarded her $92,000 in compensatory damages and $341,500 in
punitive damages. The jury also found in favor of Plaintiff with
respect to Defendants’ counterclaims. Following the jury’s
verdict, Defendants renewed their motion for judgment as a matter
of law, which the district court again denied. This timely appeal
followed, in which Defendants raise numerous assignments of error.
Several are worthy of our addressing separately.
II.
Defendants challenge the district court’s denial of their Rule
50(b) motion for judgment as a matter of law with respect to
Plaintiff’s negligence/breach of fiduciary duty claim on the basis
that, inter alia, there was insufficient evidence to establish that
Defendants and Plaintiff had a fiduciary relationship, and,
therefore, they cannot be liable for breach of fiduciary duty.
This challenge is without merit.
We review the denial of a motion for judgment as a matter of
law de novo. Bryte v. American Household, Inc., 429 F.3d 469, 475
(4th Cir. 2005). In reviewing the evidence in the record, we must
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draw all reasonable inferences in favor of the non-moving party and
we may not make credibility determinations or weigh the evidence.
Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 149-150
(2000). Although we should review the record as a whole, we must
disregard all evidence favorable to the moving party that a jury
would not be required to believe. Id. at 151. “That is, [we]
should give credence to the evidence favoring the nonmovant as well
as that evidence supporting the moving party that is uncontradicted
and unimpeached, at least to the extent that that evidence comes
from disinterested witnesses.” Id. (internal quotation marks
omitted).
Under Virginia law, the elements of a negligence cause of
action are: (1) a legal duty on the part of the defendant; (2)
breach of that duty; (3) a showing that such breach was the
proximate cause of injury; and (4) such injury resulted in damage
to the plaintiff. Blue Ridge Service Corp. of Va. v. Saxon Shoes,
Inc., 624 S.E.2d 55, 62 (Va. 2006). Plaintiff sought to prove her
negligence cause of action, inter alia, on the theory that
Defendants and she had a common law fiduciary relationship under
which they owed her fiduciary duties which they breached,
proximately causing her injury and resulting in her suffering
damages.
Under Virginia law, whether a fiduciary relationship exists is
a question of fact. Allen Realty Corp. v. Holbert, 318 S.E.2d 592,
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595 (Va. 1984). A fiduciary relationship exists “when special
confidence has been reposed in one who in equity and good
conscience is bound to act in good faith and with due regard for
the interests of the one reposing the confidence.” Id. (internal
quotation marks omitted). Based upon this duty, the fiduciary is
obligated to tell his principal about “anything which might affect
the principal’s decision whether or how to act.” Id. (internal
quotation marks omitted). See also State Farm Mut. Auto. Ins. Co.
v. Floyd, 366 S.E.2d 93, 97 (Va. 1988) (“A fiduciary owes total
fidelity to the interests of his principal. While the relationship
continues, he may engage in no self-dealing which may have any
adverse effect on the interests of his principal.”). Critically,
Plaintiff did not need to prove that Defendants had a fiduciary
relationship with all of EI’s female recruits, just Plaintiff.
Here, viewing the evidence in the light most favorable to
Plaintiff, as we must, sufficient evidence was before the jury for
it to reasonably find that Defendants had a fiduciary relationship
with Plaintiff. Spivack testified that she holds herself out as an
expert in the field of matchmaking. Specifically, Spivack told
Plaintiff that she was a psychologist and screened very carefully
the men who EI recommended their foreign female clients marry.6
Spivack always spoke to Plaintiff in Russian, which comforted
6
Spivack testified that she is not actually a psychologist,
but has taken many courses in psychology.
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Plaintiff. She also undertook, through her actions and words, to
advise Plaintiff, as a client of EI, regarding prenuptial
agreements, immigration matters, relationship counseling, and
American/Eastern Europe cultural/language issues. Finally, EI’s
website touted that Spivack established a relationship of trust
with Plaintiff:
Natalia’s story was not a happy one either. She came as
a fiancee of one of EI clients who did not feel that she
was the right woman for him after spending with her one
day in Kiev and a couple of weeks in Virginia. By pure
accident she missed the plane which would have taken her
back to Kiev. Trying to calm her down when she was
crying in my office I told her that I’ll introduce her to
other EI clients. “They are the most serious about
commitment and family, financially and mentally stable,
they are not cheap -- the horror stories about cheap
Americans do not apply to EI clients -- they are the best
of the best single men on the ‘market’ -- I told her --
because they joined EI showing their trust that we have
the best women like you. Don’t worry, you are in the
right place to be and I’ll take care of you.” Natalia
raised her big, red from tears eyes at me and smiled with
appreciation.
(E.A. 31-32) (emphasis added). Also, Spivack testified that
Plaintiff was not her friend, and, therefore, she did not give
Plaintiff advice as a friend. Finally, Plaintiff’s vulnerabilities
while in the United States, including language barriers, being very
far from her friends and family in the Ukraine, and being subject
to the complexities of immigration laws were all known to Spivack,
and, therefore, support the existence of a fiduciary relationship.
Cf. Delk v. Columbia, 523 S.E.2d 826, 831-32 (Va. 2000)
(defendant’s knowledge of plaintiff’s particular vulnerabilities is
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evidence of special relationship under Virginia law). See also
Snortland v. State, 615 N.W.2d 574, 578-79 (N.D. 2000) (fiduciary
relationship generally arises when there is an unequal relationship
between the parties; the party reposing the confidence must be in
a position of inequality, dependence, weakness, or lack of
knowledge).
We hold that, when all of this evidence is woven together, the
reasonable juror could find that Spivack, on behalf of herself and
EI, engaged in intentional efforts to gain Plaintiff’s trust,
confidence, and loyalty in order that Plaintiff would marry James
Fox, continue to be married to James Fox, and create another EI
success story.
We also hold the jury had sufficient evidence before it to
find by a preponderance of the evidence that Defendants breached
their fiduciary duties to Plaintiff. Spivack admitted at trial
that she knows that some women stay in abusive relationships for
fear of being deported. Spivack also testified that she knew about
the battered spouse waiver in 1999, prior to Plaintiff confiding in
her about James Fox’s physical and mental abuse. The record is
undisputed that, despite this knowledge, when Plaintiff repeatedly
complained to Spivack about such abuse and sought advice about the
situation, Spivack never told Plaintiff about the battered spouse
waiver. From this evidence, the jury could have reasonably found
that Defendants withheld knowledge of the battered spouse waiver
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from Plaintiff because they wanted to keep up EI’s 95% matchmaking
success rate, which rate happened to be, as Spivack herself
testified at trial, one of EI’s core promotional selling points.
A divorce between Plaintiff and James Fox would have negatively
affected EI’s 95% success rate.
As for the analytically intertwined elements of proximate
cause and damages, Plaintiff testified that had she known about the
battered spouse waiver prior to James Fox’s brutal physical and
mental attack in July 2000, she would have left him prior to that
time, and, therefore, would not have suffered the physical and
mental injuries that she did as the result of such attack. From
this testimony, the jury could reasonably find that had Defendants
informed Plaintiff of the battered spouse waiver prior to James
Fox’s July 2000 attack, Plaintiff would not have suffered the
physical and mental injuries that she did from the attack.
Defendants’ primary argument in challenge to the jury’s
finding of proximate cause is that Plaintiff was not legally
entitled to a battered spouse waiver at the time she complained to
Spivack about James Fox’s abuse, and, therefore, she would have
been subjected to James Fox’s brutal attack even if she had known
about the waiver prior to the attack. In support, Defendants
specifically claim that Plaintiff committed immigration fraud, and,
therefore, was ineligible for the battered spouse waiver. See 8
U.S.C. §§ 1154(a)(1)(B)(ii), 1229b(b)(2)(A)(iii) (alien must be
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person of good moral character). Defendants argued before the jury
that Plaintiff committed immigration fraud by: (1) entering the
United States in March 1998 with Hermesman on a fiancee visa with
no intent to marry him, and (2) in early 1999, knowingly using
immigration paperwork from James Fox’s previous fiancee in applying
for adjustment of her immigration status with the intent to defraud
the INS.
The jury obviously rejected Defendants’ argument. At trial,
Plaintiff gave her version of what happened when she first applied
for adjustment of status in early 1999. Plaintiff’s explanation
showed that she did not commit immigration fraud and that she
answered all of the INS’s questions honestly. The jury obviously
credited Plaintiff’s version of her actions in applying for
adjustment of her immigration status, which we must accept on
appeal. To summarize, from the evidence before the jury, the jury
could have reasonably found that Defendants owed Plaintiff
fiduciary duties which they breached by failing to inform her of
the battered spouse waiver when she put them on notice about James
Fox’s physical and mental abuse, which breach proximately caused
Plaintiff to suffer emotional and physical injuries at the hands of
James Fox. Accordingly, we reject Defendants’ challenge to the
district court’s denial of their motion for judgment as a matter of
law on the basis that the evidence does not support a fiduciary
relationship or the remaining elements of Plaintiff’s claim
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alleging negligence based upon fiduciary duty. We have also
considered Defendants’ remaining assignments of error with respect
to Plaintiff’s negligence/breach of fiduciary duty claim and find
them to be without merit.
III.
Defendants next challenge the district court’s denial of their
Rule 50(b) motion for judgment as a matter of law with respect to
Plaintiff’s claim under Virginia law for actual or constructive
fraud. Their challenge is without merit.
The elements of a claim for actual fraud under Virginia law
are: “(1) a false representation, (2) of a material fact, (3) made
intentionally and knowingly, (4) with intent to mislead, (5)
reliance by the party misled, and (6) resulting damage to the party
misled.” Evaluation Research Corp. v. Alequin, 439 S.E.2d 387, 390
(Va. 1994). Constructive fraud under Virginia law differs from
actual fraud under Virginia law “in that the misrepresentation of
material fact is not made with the intent to mislead, but is made
innocently or negligently although resulting in damage to the one
relying on it.” Id. The elements of either actual fraud or
constructive fraud must be proven by clear and convincing evidence.
Id. Thus, “[a] finding of either actual or constructive fraud
requires clear and convincing evidence that one has represented as
true what is really false, in such a way as to induce a reasonable
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person to believe it, with the intent that the person will act upon
this representation.” Id.Defendants contend that, inter alia, the district court should
have granted their motion for judgment as a matter of law with
respect to Plaintiff’s fraud/constructive fraud claim due to lack
of evidence. We disagree.
Among other misrepresentations, Plaintiff sought to prove that
Spivack, on behalf of herself and EI, committed actual or
constructive fraud by falsely telling her on several occasions
that, in light of her complaints of James Fox’s physical and mental
abuse, she only had two courses of action available to her: (1)
remain married to and living with James Fox; or (2) return to the
Ukraine. From the evidence set forth in detail in Part II supra,
a reasonable jury could find, by clear and convincing evidence,
that Spivack, on behalf of herself and EI, intentionally withheld
knowledge regarding the battered spouse waiver from Plaintiff in an
effort to preserve one of EI’s core promotional selling points,
i.e., EI’s 95% success rate. The record also shows by clear and
convincing evidence that Plaintiff reasonably relied upon Spivack’s
explanation of her two courses of action to her physical and mental
detriment. We have also considered Defendants’ remaining
assignments of error with respect to Plaintiff’s fraud/constructive
fraud claim and find them to be without merit. Accordingly, we
hold the district court did not err in denying Defendants’ Rule
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50(b) motion for judgment as a matter of law with respect to
Plaintiff’s fraud/constructive fraud claim.
IV.
Turning to the topic of damages, Defendants make several
arguments in challenge of the jury’s compensatory and punitive
damages award. We will address two--(1) Defendants’ argument that
they deserve credit for James Fox’s $115,000 settlement with
Plaintiff; and (2) Defendants’ argument that the punitive damage
award is excessive in violation of the Due Process Clause.
A. Credit for Settlement.
Relying upon Virginia Code § 8.01-34, Defendants moved post-
verdict to receive credit for James Fox’s $115,000 settlement with
Plaintiff on the basis that James Fox was a joint tortfeasor and
Plaintiff suffered indivisible injury. Virginia Code § 8.01-34
provides: “Contribution among wrongdoers may be enforced when the
wrong results from negligence and involves no moral turpitude.”
Id. (emphasis added). On appeal, Defendants contend the district
court erred by denying their motion.
We affirm the district court on this issue. Defendants’ moral
turpitude, and thus their nonentitlement to relief under § 8.01-34,
is substantiated by the jury’s award of punitive damages, because
the jury was instructed that it could only award punitive damages
if it found “by the greater weight of the evidence that the
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opposing party acted with actual malice toward that party or acted
under circumstances amounting to a willful and wanton disregard of
that party’s rights . . . .” (J.A. 2130).
B. Due Process Clause.
Defendants argued below and argued on appeal that the jury’s
punitive damages award is excessive in violation of the Due Process
Clause of the Fifth Amendment, and, therefore, the district court
erred in denying its motion to reduce it. Defendants’ argument is
without merit.
Compensatory damages are intended to redress the concrete loss
that plaintiff has suffered by reason of the defendant’s wrongful
conduct. State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408,
416 (2003). In contrast, punitive damages are aimed at deterrence
and retribution. Id.Defendants argue that the jury’s award of punitive damages is
excessive under the guideposts set forth in BMW of North Am., Inc.
v. Gore, 517 U.S. 559, 562 (1996). We disagree. BMW sets forth
three guideposts to consider de novo in reviewing a punitive damage
award for excessiveness under the Fourteenth Amendment7: “(1) the
7
We note that BMW involved an excessiveness challenge to a
punitive damage award under the Due Process Clause of the
Fourteenth Amendment, while Defendants’ challenge to the punitive
damage award here is properly brought under the Due Process Clause
of the Fifth Amendment, given that the governmental action
challenged involved a federal tribunal. Johnson v. Hugo’s
Skateway, 974 F.2d 1408, 1411 n.1 (4th Cir. 1992) (en banc)
(punitive damage award arising from federal tribunal is properly
challenged under the Due Process Clause of the Fifth Amendment).
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degree of reprehensibility of the defendant’s misconduct; (2) the
disparity between the actual or potential harm suffered by the
plaintiff and the punitive damages award; and (3) the difference
between the punitive damages awarded by the jury and the civil
penalties authorized or imposed in comparable cases.” State Farm
Mut. Auto. Ins. Co., 538 U.S. at 418 (citing BMW).
Here, after considering all of the evidence before it, the
jury awarded Plaintiff $92,000 in compensatory damages and $341,500
in punitive damages. Accordingly, the ratio of punitive damages to
compensatory damages--the focus of the second guidepost--is less
than four to one. Under the Supreme Court’s most recent
pronouncement on this issue, the four to one ratio is not
excessive. State Farm, 538 U.S. at 425 (“an award of more than
four times the amount of compensatory damages might be close to the
line of constitutional impropriety”) (emphasis added).
The first guidepost--i.e., the degree of reprehensibility of
the defendant’s misconduct--does not suggest excessiveness in this
case either. Defendants’ knowing allowance of this woman to remain
in such a physically and mentally abusive relationship while she
Because Defendants urge review of the punitive damage award under
BMW, Plaintiff does not object, and there appears no sound reason
to apply a different excessiveness test in the Fifth Amendment
context as opposed to the Fourteenth Amendment context, Morgan v.
Woessner, 997 F.2d 1244, 1255 (9th Cir. 1993) (“The two Clauses
should be applied in the same manner when two situations present
identical questions differing only in that one involves a
proscription against the federal government and the other a
proscription against the States.”), we apply BMW.
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was pregnant is highly reprehensible. Finally, the last guidepost-
-i.e., the difference between the punitive damages awarded by the
jury and the civil penalties authorized or imposed in comparable
cases--does not offer us much guidance one way or the other. For
example, while MOBA caps civil penalties at $20,000 for each
failure-to-disclose violation, 8 U.S.C. § 1375(b)(2)(A), a failure-
to-disclose violation of MOBA does not take into consideration the
willful and wantonness of Defendants’ conduct here. Neither party
has pointed to any other civil-penalty schemes for our comparison.
In the final analysis, we have no basis to hold that the
jury’s punitive damage award is excessive.
V.
We have carefully reviewed Defendants’ remaining assignments
of error and conclude they are without merit. Accordingly, we
affirm the judgment in favor of Plaintiff below in toto.8
AFFIRMED
8
Upon Plaintiff’s post-oral argument motion, we take judicial
notice that, on March 10, 2006, the United States issued Plaintiff
official notice approving her application to adjust to permanent
resident status and a Permanent Resident Card.
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