COURT OF APPEALS OF VIRGINIA
Present: Judges Raphael, Lorish and Bernhard
PUBLISHED
Argued at Christiansburg, Virginia
ALLEGHENY CONSTRUCTION COMPANY, INC.
v. Record No. 0134-25-3
TOWN OF CHRISTIANSBURG, VIRGINIA, ET AL.
MCCORMICK TAYLOR, INC. OPINION BY
JUDGE DAVID BERNHARD
v. Record No. 0141-25-3 DECEMBER 16, 2025
ALLEGHENY CONSTRUCTION COMPANY, INC.
KLEINFELDER, INC., F/K/A
CENTURY ENGINEERING, INC., D/B/A
NXL CONSTRUCTION SERVICES
v. Record No. 0143-25-3
ALLEGHENY CONSTRUCTION COMPANY, INC.
FROM THE CIRCUIT COURT OF MONTGOMERY COUNTY
K. Mike Fleenor, Jr., Judge
D. Stan Barnhill (Woods, Rogers, Vandeventer, Black, PLC, on
briefs), for Allegheny Construction Company, Inc.
Christopher K. Jones (N. Reid Broughton; R. Webb Moore; L. Lee Byrd; Sands
Anderson PC, on brief), for appellees Town of Christiansburg, Virginia and Justin
St. Clair.
Joseph W. Cooch (Law Office of Joseph W. Cooch, PLLC, on briefs),
for appellant McCormick Taylor, Inc. and appellee Sam A. Styers.
Kenneth D. Smith (Ronan A. Geronimo; O’Hagan Meyer PLLC, on
briefs), for appellant Kleinfelder, Inc. and appellee Daniel W. Rich.
These consolidated interlocutory appeals present a narrow yet significant question in
public construction contracting: whether a contractor may maintain tort claims against
consultants or municipal employees, who acting as agents of a municipality, allegedly advised
the municipality to deny the contractor’s requests for additional payment.
These appeals arise from a single public works project. Allegheny Construction
Company, Inc. (“Allegheny”) contracted with the Town of Christiansburg (the “Town”), to
perform roadway improvements. The Town separately retained McCormick Taylor, Inc. (“MT”)
as design engineer and NXL Construction Services (“NXL,” now Kleinfelder, Inc., d/b/a NXL)
for construction engineering and inspection services. In its amended complaint, Allegheny
alleged that MT, NXL, their respective employees, and the Town’s project manager (1)
tortiously interfered with the contract between Allegheny and the Town and (2) conspired to
deprive Allegheny of additional compensation it was due.
The amended complaint and attachments thereto detail the roles of each consultant and
the Town’s employee were defined entirely by contract, and each acted as the Town’s agent in
performing assigned professional duties. Under established Virginia law, a principal and its
agents are regarded as a single legal entity when the alleged conduct of the agents arises solely
from, or breaches only, contractual duties owed under the employment relationship. Because
Allegheny alleged no conduct by NXL, MT, their agents, or any Town employee outside the
scope of their agency, its claims sound solely in contract. As a matter of law, agents acting
solely within the scope of their agency cannot be liable for tortious interference with their
principal’s contract or for conspiring with the principal or with each other.
Accordingly, the circuit court erred in overruling the demurrers of NXL and MT but
properly dismissed the claims against the individual employees, albeit reaching the right result
for the wrong reason. The judgment of the circuit court is therefore affirmed in part, reversed in
-2-part, and remanded with direction to dismiss the interference and conspiracy counts against these
defendants.
BACKGROUND
On November 8, 2021, Allegheny filed its initial complaint against the Town under Code
§ 2.2-4335(D) of the Virginia Public Procurement Act. The Town responded on November 29,
2021, with a demurrer, answer, counterclaim, and a third-party complaint against MT for
indemnification and breach of contract. After initial discovery, on August 4, 2023, Allegheny
filed an amended complaint directly naming MT, one of MT’s employees, NXL, one of NXL’s
employees, the Town, and a Town employee. Count I alleged breach of contract against the
Town. Counts II, III, and IV asserted tortious interference, business conspiracy, and common
law conspiracy against all defendants.
On May 20, 2019, Allegheny entered into a contract with the Town (the “Allegheny
Contract”) to serve as the general contractor for a public road improvement project at the
intersection of Cambria Street and North Franklin Street (the “Project”). The Town had
previously contracted separately with NXL for construction engineering and inspection services
and with MT for project design services. MT assigned its employee, Sam A. Styers, as project
representative, and NXL assigned its employee, Daniel W. Rich, as field engineer and scheduler.
The Town designated Justin St. Clair, a municipal employee, as its project manager and liaison
with Allegheny.
The Allegheny Contract required Allegheny to construct the work described in the
“Contract Documents,” which included the drawings prepared by MT but did not include the MT
design contract. The Allegheny Contract expressly stated there were no Contract Documents
other than those listed. The Allegheny Contract incorporated “General Conditions” that
identified MT as the Project’s designer and NXL as the “Engineer” and “Owner’s
-3-representative.” These conditions vested NXL with authority to reject defective work, stated
NXL’s authority was limited to the role assigned by contract, and expressly disclaimed any duty
“in contract, tort, or otherwise” owed by the Engineer to the contractor.
The Allegheny Contract placed certain obligations on Allegheny, including warranting it
had carefully studied the Contract Documents, inspected the site, and confirmed the documents
were generally sufficient for performance. The documents were subject to professional
interpretation, and the contract acknowledged plans might omit details, require inference, or lack
dimensional precision.
The Allegheny Contract provided Allegheny may be entitled to additional compensation
if the Town, MT, or NXL caused delays, disruptions, or differing site conditions. Evaluation of
such claims required engineering judgment, and the contract specifically vested the “Engineer”
with authority to render decisions on requirements of the Contract Documents and acceptability
of work. Any contractual claims by Allegheny were to be submitted to the Town and NXL, with
the Town retaining its authority as the sole conclusive decision-maker.
The Town’s March 1, 2017 design contract with MT authorized MT to prepare
preliminary and final design documents, perform surveys, locate utilities, conduct traffic
analyses, and produce roadway plans and quantity summaries. MT was also required to perform
a constructability review, attend pre-advertisement meetings, and assist the Town in preparing
bid documents. The design contract additionally obligated MT to provide construction-phase
support, specifically to “address any requests for information . . . on an as-needed basis” and to
“attend on-site progress meetings during construction.” Although Allegheny later alleged MT’s
role did not extend to advising the Town regarding contractor claims, nothing in the design
contract prohibited MT from performing additional services, and the contract between MT and
the Town expressly allowed the Town and MT to modify its scope without requiring Allegheny’s
-4-consent. MT’s contract further required it to meet the standard of professional care “ordinarily
exercised by members of its profession” and to be “fully responsible to the Town for all
negligent acts and omissions” of its employees and agents. MT agreed to indemnify and hold the
Town harmless from damages or liabilities caused by its negligence, recklessness, or intentional
misconduct, including damages the Town might incur in connection with contractor claims.
The Town’s March 27, 2019 contract with NXL explicitly provided, “NXL Construction
Services, Inc. will act as an agent on behalf of the Town of Christiansburg.” Among its assigned
duties were construction administration tasks including “review and comment” on contractor
submittals such as requests for payment, requests for information, proposed plan revisions,
notices of intent to file claims, and change orders, as well as inspection and materials testing
services for the Project. NXL’s responsibilities also included having an inspector on-site to
ensure the work was performed in accordance with the plans and specifications prepared by MT.
After commencing work, Allegheny concluded MT’s design documents were “replete
with errors and omissions” that, according to Allegheny, adversely affected the Project, causing
repeated delays, increased costs, and disrupted performance. Beginning in 2020, Allegheny
submitted claims to the Town seeking approximately $700,721.35 in additional compensation,
which it described as “meritorious” but remained “wrongfully” unpaid.
Allegheny alleged MT, in concert with NXL and Town officials, improperly engaged in
“secret” communications about these claims outside Allegheny’s presence, advising the Town to
deny them and seeking to avoid responsibility for MT’s own design errors, presenting a “united
front” against Allegheny. Allegheny characterized MT’s conduct as stepping outside its
“contractual lanes” and asserted such actions constituted tortious interference with its rights
under the Allegheny Contract. Examples of the alleged tortious conduct include emails
referencing consensus strategies for “how strongly we wish to respond” to Allegheny’s claims,
-5-Rich’s references to “fighting” Allegheny’s claims, and MT’s internal comment dismissing
errors as “lots of laughs . . . I’ll add it to the list.”
According to the amended complaint, Rich prepared internal arguments and described
developing “ammo” to defeat Allegheny’s claims, stating such defenses would be kept “in our
bag” until needed. Rich drafted responses for the Town to use in evaluating Allegheny’s claims,
including a July 10, 2019 memorandum concerning the fourth message board, a November 27,
2019 email urging the Town to “stand up and fight” the claims, and a March 23, 2020 draft email
denying overhead compensation. He also participated in behind-the-scenes meetings to discuss
design errors and claims, shared his views certain claims were overstated, including referring to a
claim as “just Allegheny being Allegheny,” and forwarded draft communications to the Town for
review before sending them to Allegheny. The amended complaint alleged that in March 2021,
Rich sent St. Clair suggested defenses for the Town to assert, and in his employee evaluation,
Rich noted he had “continued to support the Town in their Claims with Allegheny.”
Styers allegedly provided edits to Rich’s draft responses, emailed Rich a list of “items the
Town could argue” in response to Allegheny’s claims, and informed a surveyor Allegheny’s
claim had been “refuted.” In January 2021, Styers discussed the possibility of involving MT’s
errors-and-omissions insurer depending on the size of Allegheny’s demands. In April 2021,
Styers had a phone call with St. Clair reporting Allegheny’s claims were “bogus.”
St. Clair, along with Rich, allegedly “turned a deaf ear” to Allegheny’s requests for
assistance in addressing design errors and allowed MT to correct design errors piecemeal rather
than pressing for prompt resolution. St. Clair was alleged to have instructed MT not to bill for
design corrections in 2019, although the Town later paid for that work. St. Clair emailed Styers
in October 2020 requesting a “chat” to discuss claims prior to a meeting with Allegheny and
disclosing that the Town and NXL had already met with an attorney regarding the claims. In
-6-December 2020, he forwarded Allegheny’s claim analysis to Styers, noting he had already
reviewed it privately with Rich and wanted MT’s input before responding. In May 2021,
St. Clair was described as coordinating a call with counsel and confirming the Town had secured
additional funds to pay MT.
The amended complaint also alleged the Town approved extra payments to NXL and MT
for services outside their contracts, without change orders allegedly required under the
Allegheny Contract. In MT’s case, Allegheny alleged the Town paid for correction of MT’s own
design errors and that such payments were concealed from the Virginia Department of
Transportation. On May 27, 2021, the Town denied all of Allegheny’s claims. In July 2021, the
Town authorized additional payment to NXL expressly for “behind-the-scenes assistance in
resisting Allegheny’s claim.”
In response to the amended complaint, all defendants filed demurrers and motions
craving oyer, and the individual defendants joined the arguments of their employers. St. Clair’s
demurrer asserted that the claims brought against him in the amended complaint fail as a matter
of law because he owed no independent duty to Allegheny apart from his role as the Town’s
agent. He further contended that, absent a predicate unlawful act, he could not be held liable for
conspiracy. The circuit court’s order of September 20, 2024, stated that the three contracts were
incorporated into the amended complaint pursuant to the motions craving oyer, and the court
considered all the demurrers together.
In its demurrer, NXL contended Allegheny’s claims fail as a matter of law. First, NXL
argued that any duty it owed arose solely from its contract with the Town, so Allegheny’s claim
was barred by the source-of-duty and economic-loss rules. Second, NXL asserted that Virginia
law does not support a tortious-interference claim against an owner’s agent who merely advises
the owner regarding contractor claims. Third, as the Town’s agent, NXL contended it could not
-7-legally conspire with its principal, and therefore the conspiracy claims fail. The circuit court
denied NXL’s demurrer by letter opinion on June 17, 2024.
Likewise, in its demurrer, MT argued that the tort claims were barred as a matter of law,
asserting similar justifications. First, MT contended that Allegheny’s claim depended on duties
established by contract, and therefore the claim sounds in contract, barred by the source-of-duty
and economic-loss rules. Second, MT maintained the amended complaint failed to state a cause
of action for tortious interference with contract because MT was not a “stranger” to the
Allegheny Contract. Third, MT asserted the contracts attached to the amended complaint upon
oyer directly refute Allegheny’s characterization of the contractual duties that form the basis of
the cause of action. MT further argued that because the tortious-interference claim fails, the
conspiracy claim, which depend on an underlying tortious act, also fails as a matter of law.
In its June 17, 2024 letter opinion, the circuit court overruled the demurrer in part,
holding that Allegheny had “properly pled its case” under theories of tortious interference,
business conspiracy, and common law conspiracy. The court further noted that whether MT
stayed “inside its contractual lane” was a question for the jury. The circuit court sustained the
demurrers filed by the individual defendants, St. Clair, Styers, and Rich, finding that they acted
as “agents of their employers.” The court dismissed them from Allegheny’s suit with prejudice
and without leave to amend. The circuit court denied all motions for reconsideration and entered
a final order memorializing its rulings on December 20, 2024.
These consolidated interlocutory appeals followed.
ANALYSIS
This Court reviews de novo whether a complaint sufficiently states a cause of action.
Highlander v. Va. Dep’t of Wildlife Res., 84 Va. App. 404, 422 (2025). A demurrer tests the
legal sufficiency of facts alleged, not the strength of proof, and admits the truth of all material
-8-facts properly pleaded. Robinson v. Nordquist, 297 Va. 503, 514 (2019); Dunn, McCormack &
MacPherson v. Connolly, 281 Va. 553, 557 (2011). Documents incorporated via motions
craving oyer are considered part of the pleadings and may amplify the factual allegations. Hale
v. Town of Warrenton, 293 Va. 366, 366 (2017).
In substance, the issues involved in the three appeals reduce to whether Allegheny
alleged only a contractual basis for its claims against all defendants. If so, its amended
complaint pleads itself out of court.
I. Tortious Interference
A. Legal Elements
Virginia recognizes the tort of intentional interference with a contract. Chaves v.
Johnson, 230 Va. 112, 120 (1985). To establish a prima facie case, a plaintiff must prove: (1) a
valid contractual relationship; (2) the interferor’s knowledge thereof; (3) intentional interference
inducing or causing a breach; and (4) resulting damage. Dunlap v. Cottman Transmission Sys.,
LLC, 287 Va. 207, 216 (2014). The third element requires the defendant act with knowledge and
deliberate purpose to disrupt performance; “malice, in the sense of ill will, is not required.”
Chaves, 230 Va. at 120 (citing Restatement (Second) Torts § 766 cmt. s (A.L.I. 1977)).1
The question then becomes whether Allegheny’s allegations, viewed in light of Virginia
agency principles, can satisfy the third requirement, intentional interference by a legally distinct
actor. The answer depends on whether the Town and its agents may be treated as separate
persons for purposes of tort liability.
1
“[W]hen a contract is terminable at will, a plaintiff, in order to present a prima facie case of tortious interference, must allege and prove not only an intentional interference that caused the termination of the at-will contract, but also that the defendant employed ‘improper methods.’” Duggin v. Adams, 234 Va. 221, 226-27 (1987). This dispute, however, concerns payment rather than termination. So, we treat this claim as involving an alleged breach of contract, not a deprivation of business expectancy.
-9-B. Agency Principles Applied
Allegheny’s tortious-interference claims fail because the amended complaint does not
allege facts showing “intentional interference inducing or causing a breach or termination of the
relationship or expectancy” by the Town or any of its agents, including St. Clair, Rich, Styers, or
their employers. Chaves, 230 Va. at 120. Allegheny’s amended complaint asserts merely
breaches of contractual duties.
The Supreme Court of Virginia has made clear that a person “cannot intentionally
interfere with his own contract” and that an agent acting within the contractual scope of
employment shares its principal’s legal identity and cannot be a “third-party” interferor.2 Fox v.
Deese, 234 Va. 412, 427 (1987). This principle parallels the Court’s conclusion that an
employee acting within the scope of employment cannot be held liable for common law or
statutory business conspiracy because the employer and employee are not separate persons for
purposes of the tort. Id. at 428-29; see also Charles E. Brauer, Co. v. NationsBank of Va., N.A.,
251 Va. 28, 36 (1996); Perk v. Vector Res. Grp., 253 Va. 310, 317 (1997) (holding “a
principal-agent or employer-employee relationship” among defendants does not render them a
single entity capable of “conspir[ing] with itself” (citing Brauer, 251 Va. at 36; Fox, 234 Va. at
428)).
That reasoning applies equally to tortious interference: a principal and its agents cannot
among themselves interfere with their own contract. Allegheny’s complaint alleges only that
NXL and MT performed the services they were retained to provide—reviewing submittals,
evaluating claims, and advising the Town. These contractual designations confirm that NXL and
2
In support of its position, Allegheny cites Dunlap v. Cottman Transmission Sys., LLC, 287 Va. at 222, but that case held that tortious interference could serve as the predicate for a business conspiracy claim, not that a party’s agents alone can be treated as independent interferors.
- 10 -MT acted within their defined agency roles and therefore cannot be treated as third parties under
Fox v. Deese and Charles E. Brauer, Company v. NationsBank of Virginia.3
Although Fox does not shield agents who act entirely outside of their agency—for
example, by defrauding unrelated parties—no such conduct is alleged here. The critical
distinction lies between conduct performed within the scope of contractual duties assigned to the
agent and independent tortious conduct undertaken outside any contractual duty framework.
Allegheny’s claims describe only contractual performance within the agents’ delegated roles; the
amended complaint alleges that NXL and MT performed the very services they were retained to
provide: reviewing submittals, evaluating claims, and advising the Town. Under Fox, those
activities fall squarely within the scope of agency immunity. Accordingly, NXL, MT, and the
Town’s employee share a single legal identity, barring tortious interference liability.
Allegheny contends that whether St. Clair acted within the scope of employment presents
a jury question that cannot be determined on demurrer, noting that an evidentiary hearing was
required in Fox, 234 Va. at 427. But whether scope of employment determinations can be
resolved on demurrer depends on the content of the allegations and pleadings in the case
presented. Compare Parker v. Carilion Clinic, 296 Va. 319, 333, 339 (2018) (sustaining
demurrer where alleged conduct fell outside scope of employment as a matter of law), with
Plummer v. Ctr. Psychiatrists, 252 Va. 233, 235-37 (1996) (reversing demurrer where plaintiff
3
Because MT was expressly identified in the Allegheny Contract, its drawings served as the foundation for Allegheny’s performance, and it was contractually integrated into the Project as a “limited agent” of the Town, MT cannot, as a matter of law, be considered a “stranger” to the contract. See Comptroller of Va. ex rel. Va. Mil. Inst. v. King, 217 Va. 751, 761 (1977) (holding that a project architect functioned as a limited agent of the owner); Kirk Reid Co. v. Fine, 205 Va. 778, 782 (1965) (recognizing that project architects and engineers acted as limited agents). Since we resolve this case on the ground that MT and NXL acted as agents of the Town within the scope of their contractual duties, we need not reach the broader question raised by the parties of whether non-agents who participate in a web of related contracts can be liable for tortious interference with one such contract.
- 11 -alleged sufficient facts showing employee acted within scope of employment). Fox did not hold
that scope of employment determinations necessarily require an evidentiary hearing, only that
one was needed for the determination in that case.
Under Virginia law, contractual relationships among parties define the scope and limits
of their respective duties. See Blake Constr. Co. v. Alley, 233 Va. 31, 34 (1987). The contracts
incorporated by motions craving oyer define NXL’s and MT’s duties, which expressly include
reviewing claims and advising the Town. When NXL evaluated Allegheny’s claims and MT
provided technical analysis as the Town’s designer, they were not independent actors; their
conduct as agents was legally that of the Town. Because NXL and MT were retained as the
Town’s agents, and St. Clair served as its employee, each acted within the scope of agency in
matters related to the Allegheny Contract. Their communications and recommendations to the
Town are therefore legally imputed to the Town itself under Fox’s single-entity rule. To hold
otherwise would improperly divide the principal-agent relationship and expose agents to tort
liability for performing their contractual duties.
This conclusion is reinforced by long-standing Virginia precedent rejecting efforts to
transform contract-based disputes into tort claims. The Supreme Court of Virginia has made
clear the law does not permit “turning every breach of contract into an actionable [tort].”
Richmond Metro. Auth. v. McDevitt St. Bovis, Inc., 256 Va. 553, 559-60 (1998). Tort liability
arises only when the defendant violates a duty recognized at common law and independent of the
contract. Tingler v. Graystone Homes, Inc., 298 Va. 63, 82-83 (2019). Where the alleged
wrongs are “inextricably entwined” with contractual obligations, the claims sound in contract
and contractual remedies control. Id. at 86. Here, Allegheny’s allegations against NXL, MT,
and the individual defendants arise solely from duties defined by the Allegheny Contract, not
from any independent common-law duty. Thus, the viability of Allegheny’s interference claims
- 12 -turns on whether the corporate defendants, NXL and MT, acted as independent entities or as the
Town’s agents within the scope of their assigned contractual duties. That inquiry requires closer
attention to the contracts incorporated into the pleadings and the specific allegations of the
amended complaint.
C. Agency Status of Corporate Defendants
The amended complaint establishes both NXL and MT were the Town’s agents. The
NXL contract expressly designated NXL as the Town’s agent, and its assigned duties included
construction-administration services: review and comment on payment requests, requests for
information, plan revisions, notices of claims, and change orders. The Allegheny Contract
likewise identified NXL as the Owner’s representative.
Allegheny’s allegations focus precisely on these contractual functions, contending NXL
“worked in secret with the Town to impose meritless obstacles” and resisted claims. But
Allegheny simultaneously admitted that in July 2021, the Town authorized additional payment to
NXL for “behind-the-scenes assistance in resisting Allegheny’s claim.” That admission
confirms that the Town expressly retained and compensated NXL for the very conduct
Allegheny characterizes as tortious interference.
Similarly, MT’s role was contractually defined. The Allegheny Contract expressly
identified MT as the Project’s designer and incorporated MT’s drawings into the Contract
Documents. MT’s design contract required it to provide construction-phase support, including
addressing requests for information and attending progress meetings. Nothing in the design
contract prohibited MT from performing additional services, and it expressly allowed
modifications without Allegheny’s consent.
Because agency status of the corporate defendants is established by the pleadings
themselves, the same analysis extends to the conduct of the individual defendants who executed
- 13 -those functions on the Town’s behalf. We thus next address whether the acts alleged against
St. Clair, Rich, and Styers exceed the scope of agency recognized in Fox.
D. Alleged Conduct of the Individual Defendants
St. Clair: The amended complaint alleged St. Clair, the Town’s project manager, along
with Rich, “turned a deaf ear” to Allegheny’s requests, allowed piecemeal design corrections,
instructed MT not to bill for 2019 design corrections, coordinated with consultants before
meetings with Allegheny, forwarded claim analyses for internal review, and received suggested
defenses from Rich.
Styers: The amended complaint alleged Styers emailed Rich with arguments he believed
the Town could assert, suggested edits to draft responses, informed a surveyor claims had been
“refuted,” participated in communications with St. Clair and Rich, and discussed involving MT’s
errors and omissions insurer.
Rich: The allegations state Rich prepared draft responses, outlined claim-handling
strategies, exchanged emails about Town responses, participated in meetings about design errors
and Allegheny’s claims, shared views that those claims were overstated, forwarded draft
communications for the Town’s review, and noted in his evaluation he “continued to support the
Town in their Claims with Allegheny.”
The statements and conduct attributed to these individuals, even taken in Allegheny’s
favor, constitute employee or consulting advice provided in administering the Project, not
inducement to breach the Allegheny Contract. St. Clair’s coordination with consultants, Rich’s
draft responses and strategies, and Styers’s lists of arguments all concern the Town’s potential
liability under disputed contract provisions—recommendations about what was owed, not
intermeddling with performance. Taken together, these statements reveal advisory
- 14 -communications internal to the Town’s contract administration—conduct that reflects
coordination, not interference.
E. Unity of the Town and Its Agents
When read together, Chaves, Fox, and Brauer establish a single controlling rule: an agent
performing within the scope of a principal’s contractual relationship cannot, as a matter of law,
tortiously interfere with that contract. The actions of NXL, MT, their respective employees, and
St. Clair, as alleged in Allegheny’s amended complaint, are legally the actions of the Town itself.
The amended complaint fails to allege facts showing either interference by an independent third
party or breach of a duty independent of the contractual relationship. Dismissal of the
tortious-interference claims against all these Town agents is proper. In sum, once the agency
framework is properly applied, the analytical progression from Chaves through Fox and Brauer
demonstrates that Allegheny’s tortious interference theory collapses into a contract dispute. The
alleged wrongs arise entirely within the Town’s unified contractual operations and do not
implicate any independent common-law duty.
II. Business and Common Law Conspiracy
A. Statutory Versus Common Law Conspiracy
Virginia recognizes common law causes of action for civil conspiracy and statutory
actions for business conspiracy. Both statutory and common law conspiracy require proof of
concerted wrongful conduct and resulting injury. Common law conspiracy requires a
“combination of two or more persons to accomplish an unlawful purpose or use unlawful
means,” coupled with “damage caused by the acts committed in pursuance of the formed
conspiracy.” CaterCorp, Inc. v. Catering Concepts, Inc., 246 Va. 22, 28 (1993) (quoting Gallop
v. Sharp, 179 Va. 335, 338 (1942)). Statutory conspiracy explicitly requires a showing by clear
and convincing evidence that the defendant acted “maliciously.” It is not necessary, however,
- 15 -for a plaintiff to prove that the defendant conspirators acted with “ill-will, hatred, or spite
directed toward the plaintiff.” Dunlap, 287 Va. at 215 (citing Com. Bus. Sys., Inc. v. BellSouth
Servs., 249 Va. 39, 47 (1995)). Rather, a plaintiff must establish “only that the conspirators
acted with legal malice, i.e., ‘intentionally, purposely, and without lawful justification.’” Id.
(quoting Com. Bus. Sys., 249 Va. at 47). We next consider whether Allegheny’s amended
complaint adequately alleges either of these conspiracy claims.
B. Intracorporate Immunity Doctrine
Allegheny asserted both statutory and common law conspiracy claims, alleging that the
Town, NXL, MT, and their respective employees “intentionally conspired in secret to interfere
with Allegheny’s contract rights and to deny . . . $700,721.35 in additional compensation.” The
amended complaint cites emails in which NXL, MT, and the Town allegedly presented a “united
front” and discussed “how strongly we wish to respond” to Allegheny’s claims. Even if accepted
as true, these allegations do not establish a conspiracy.
Whether framed as statutory or common law conspiracy, both claims fail here under the
intracorporate immunity doctrine articulated in Brauer, 251 Va. at 36. In Brauer, the Supreme
Court of Virginia considered whether NationsBank and its loan-servicing agent, AMRESCO,
could conspire under Code § 18.2-499. Id. at 33, 36. It held that because AMRESCO “was the
bank’s agent retained to service ‘problem’ loans, and that it acted within the scope of its agency,”
conspiracy was “a legal impossibility,” as only “one entity existed, the bank, and a single entity
cannot conspire with itself.” Id. at 36. The Brauer Court made no distinction between statutory
and common law conspiracy in holding “a principal and an agent are not separate persons for
purposes of the conspiracy statute.” Id. The same reasoning applies to both forms of conspiracy:
when agents act within the scope of their agency, they and their principal constitute a single legal
entity incapable of forming the “combination of two or more persons” required for a conspiracy
- 16 -claim. Accordingly, whether Allegheny proceeds under Code §§ 18.2-499 and -500 or common
law conspiracy, the threshold element of at least two separate legal actors is absent as a matter of
law.
Allegheny asserts that the Town, NXL, MT, and the individual defendants covertly
coordinated to resist its claims. Yet NXL’s contract expressly established its agency relationship
with the Town. MT served as the Town’s design professional with construction-phase support
obligations, and St. Clair was the Town’s employee and project manager. Under Brauer, these
entities and individual constituted a single legal actor, the Town, for conspiracy purposes. Just
as the bank in Brauer could not conspire with its agent, the Town cannot conspire with NXL,
MT, their respective employees, or St. Clair while each acted within the scope of their agency.
Brauer also forecloses Allegheny’s suggestion that the agents conspired among
themselves. The Court held agents acting within the scope of employment cannot conspire with
each other. Id. The conduct alleged—reviewing claims, drafting responses, providing technical
analysis, and coordinating the Town’s position, falls squarely within the scope of NXL’s
construction-administration services, MT’s construction-phase support obligations, and
St. Clair’s project-management duties. Because all three acted as agents of a single principal,
they shared a unified legal identity and could not conspire among themselves.
The Brauer holding rests on sound policy principles that are particularly relevant in public
construction projects. The Supreme Court of Virginia recognized implicitly that treating a
principal and its agents as separate conspirators would undermine the essence of agency, in
which agents act for and under the direction of their principal. Id. Applied here, that principle
preserves a municipality’s ability to rely on professional consultants for oversight, claims
evaluation, and technical advice without exposing them to conspiracy liability for performing
contractual duties. If agents like NXL and MT could face conspiracy claims merely for
- 17 -coordinating advice to the Town, such exposure would deter consultants from contracting with
public owners. Municipalities would then be hard-pressed to secure professional firms willing to
provide candid guidance essential to the administration of public construction projects. Brauer
prevents such fragmentation by recognizing agents acting within the scope of employment
constitute a single legal entity with their principal.
C. Insufficient Pleading of Unlawful Act
An additional consideration bars Allegheny’s conspiracy claims. Both statutory and
common law conspiracy require an underlying unlawful act. Hechler Chevrolet, Inc. v. Gen.
Motors Corp., 230 Va. 396, 402 (1985). A conspiracy claim “lie[s] only if a plaintiff sustains
damages as a result of an act that is itself wrongful or tortious.” Dunlap, 287 Va. at 215.
Allegheny alleges no such independent unlawful act by NXL or MT. At most, it claims NXL
advised the Town in evaluating and resisting contractor claims, conduct expressly authorized by
contract. “Non-performance of a contractual promise does not, without more, create a basis for
recovery in tort.” Station # 2, LLC v. Lynch, 280 Va. 166, 174 (2010).
The amended complaint likewise alleges no independent unlawful act by St. Clair, Styers,
or Rich, but instead challenges their participation in project administration and claims evaluation.
Each duty identified arises entirely from the contractual framework governing the Project. In the
absence of an independent tort or statutory violation, both the business and common law
conspiracy claims necessarily fail.
III. Leave to Amend
Allegheny also argues the circuit court erred in denying leave to amend its amended
complaint. Rule 1:8 provides leave to amend “shall be liberally granted in furtherance of the
ends of justice.” A trial court, however, need not permit amendment when the proffered facts
show the plaintiff cannot state an actionable claim. See Our Lady of Peace, Inc. v. Morgan, 297
- 18 -Va. 832, 846 (2019). “On appeal, review of the trial court’s decision to grant or deny a motion
to amend is limited to the question whether the trial judge abused his discretion.” Lucas v.
Woody, 287 Va. 354, 363 (2014). “After sustaining a demurrer, a court should grant a motion
for leave to amend except when . . . the proffered amendments are legally futile.” AGCS Marine
Ins. Co. v. Arlington County, 293 Va. 469, 487 (2017) (emphases added). Beyond vague and
conclusory allegations, Allegheny did not in its amended complaint “suggest [the individual
defendants] engaged in any affirmative act” sufficient to allege legally actionable wrongs. See
Cline v. Dunlora S., LLC, 284 Va. 102, 109 (2012).
Amendment of Allegheny’s claims against St. Clair, Styers, and Rich would likewise be
futile. Even after discovery, Allegheny failed to identify any additional facts that could
transform its allegations into actionable tort claims. The “new facts” Allegheny mentions only in
a sparse conclusory footnote merely repeat allegations already made—for example, that Rich
used combative language, and St. Clair acted “through” the Town. None of these assertions
elevates contractual project administration and advice by the individual defendants into viable
claims for tortious interference or conspiracy.
Moreover, denial of leave to amend is warranted here under principles of judicial
economy articulated in Hechler Chevrolet, Inc. v. General Motors Corporation. Allegheny had
abundant opportunity to amend its pleadings and pursue discovery. The amended complaint was
filed on August 4, 2023, nearly 20 months after the initial complaint, and after initial discovery
had been conducted. Despite this extended period and discovery opportunity, Allegheny did not
proffer facts to overcome the pleading deficiency. Under Hechler, 230 Va. at 403, judicial
economy requires that litigants have “one, but only one, full and fair opportunity to argue a
question of law,” and trial courts retain discretion to deny leave to amend when further
amendment would accomplish nothing more than provide opportunity for reargument.
- 19 -Thus, the circuit court’s decision to deny leave for a second amended complaint was
properly grounded in both futility and judicial economy. Because no amendment was proffered
to the circuit court that could cure these defects, the circuit court acted within its discretion in
denying leave to amend.
CONCLUSION
Virginia law draws a clear boundary between duties arising from contract and those
sounding in tort. Consultants and employees advising a municipal owner act as its agents, not as
third-party intermeddlers. When their actions and duties arise solely from contract, tort law
affords no additional remedy.
Accordingly, this Court affirms the circuit court’s dismissal of claims against St. Clair,
Styers, and Rich, although for a different reason, reverses the circuit court’s denial of the
demurrers of NXL and MT, and remands with directions to dismiss Counts II through IV of the
amended complaint against all of these defendants.
Affirmed in part, reversed in part, and remanded.
- 20 -Raphael, J., concurring.
I join the Court’s opinion in full. I write separately to point out that our
tortious-interference jurisprudence, originally founded on the Restatement (Second) of Torts
§§ 766-774A (A.L.I. 1979), has evolved to embrace the same agency rules for
tortious-interference claims now found in the Restatement (Third) of Torts: Liability for
Economic Harm (A.L.I. 2020). As discussed below, the American Law Institute (“ALI”)
acknowledged when promulgating the Restatement (Second) in 1979 that the common-law rules
for tortious-interference claims remained in a developmental stage. The Restatement (Third) has
now refined the framework, including by clarifying the rules governing such claims against a
contracting party’s agent. I close with the suggestion that, in an appropriate case, our Supreme
Court may wish to consider adopting the rest of the Restatement (Third)’s framework for
handling tortious-interference claims.
I. Typology: TIC and TIBE claims
Virginia currently recognizes two types of tortious-interference claims: tortious
interference with contract; and tortious interference with a contract at will or with business
expectancy. See generally Kent Sinclair, Sinclair on Virginia Remedies § 20-1[A], at 20-2 to
20-4 (5th ed. 2016). Legal writers should generally avoid obscure acronyms, but it is clunky to
write (and annoying to read) repeated references to “tortious interference with contract” claims
and “tortious interference with business expectancy” claims. I choose brevity over traditional
usage by using the acronyms TIC and TIBE to differentiate between those torts. Although these
acronyms are new, the idea for short-form references is not.4
4
Many courts use the acronym “IIED” for “intentional infliction of emotional distress” claims. See Butler v. Collins, 714 S.W.2d 562, 570 n.13 (Tex. 2025); Cap. City Renewables, Inc. v. Piel, 335 A.3d 588 (Me. 2025); Russell v. N.Y. Univ., 246 N.E.3d 868, 871 (N.Y. 2024); IIED, Black’s Law Dictionary (12th ed. 2024). Or “IIEI,” for “intentional interference with expectation of inheritance” claims. Dewdney v. Duncan, 2025 Vt. 26, ¶ 6 (2025).
- 21 -II. Early history of these torts
The “common law of England” as of Virginia’s founding generally continues to supply
the “rule of decision” in our courts unless changed by the General Assembly. Code § 1-200; see
generally Dodson v. Kleffman, 84 Va. App. 174, 196-97 (2025) (Raphael, J., concurring). As our
Supreme Court observed in White v. United States, 300 Va. 269 (2021), the relevant date for the
reception of English common law in Virginia is either 1776 or 1792. Id. at 277 n.5.
Although English common law before 1792 recognized the precursor of a TIBE claim, it
did not recognize a TIC claim.5 As our Supreme Court explained in Chaves v. Johnson, 230 Va.
112 (1985), a TIC claim was first recognized in 1853 when it was adopted in England “by a
majority of the judges of the Queen’s Bench in Lumley v. Gye, 2 El. & Bl. 216, 118 Eng. Rep.
749 (1853).” Id. at 120.6 Lumley allowed one theater owner to seek damages against another
theater owner for causing a singer to breach her singing engagement. 2 El. & Bl. at 224, 118
Eng. Rep. at 752 (Crompton, J.). Earlier English cases, by contrast, recognized claims for
interfering with general business expectancies. See, e.g., Abbot of Denesham’s Case, 29 Edw. III
5
We have encountered other doctrines that likewise did not exist under English common law before 1792 and that were therefore developed by our Supreme Court as a matter of Virginia common law. See, e.g., Dodson, 84 Va. App. at 197-201 (Raphael, J., concurring) (the “duty” element in actions for negligence); Atkins v. Commonwealth, 85 Va. App. 542, 552-53 (2025) (Raphael, J., concurring) (whether solicitation qualifies as an overt act for criminal attempt).
6
Some scholars trace the development of the tort to Blake v. Lanyon, 6 T.R. 221, 222, 101 Eng. Rep. 521, 522 (K.B. 1795) (per curiam). See, e.g., Francis B. Sayre, Inducing Breach of Contract, 36 Harv. L. Rev. 663, 666 & n.10 (1923). The court in Blake authorized an employer to sue another employer for knowingly hiring away his servant. See 6 T.R. at 222, 101 Eng. Rep. at 522 (“A person who contracts with another to do certain work for him is the servant of that other till the work is finished, and no other person can employ such servant to the prejudice of the first master; the very act of giving him employment is affording him the means of keeping out of his former service.”). In 1774, the Court of King’s Bench allowed a plaintiff who had engaged journeyman shoemakers (day laborers) to sue the defendant who enticed them to work for him instead, although it is unclear if the case involved breach of fixed contracts or mere contract expectancies. Hart v. Aldridge, 1 Cowp. 54, 98 Eng. Rep. 964 (1774). Roman law too recognized claims for interfering with another’s servant. See Sayre, supra, at 663.
- 22 -18 (1356) (finding it actionable to prevent persons from coming to plaintiff’s fair); Garrett v.
Taylor, Cro. Jac. 567, 567, 79 Eng. Rep. 485, 486 (K.B. 1621) (imposing liability for interfering
with prospective contract by threatening to commit “mayhem and [to] vex with suits”); Keeble v.
Hickeringill, 11 East 574, 575, 103 Eng. Rep. 1127, 1128 (K.B. 1706) (Holt, C.J.) (approving
action for intentionally discharging guns to frighten waterfowl away from neighbor’s property,
thereby interfering with neighbor’s livelihood in employing decoys to attract them). See
generally W. Page Keeton et al., Prosser & Keeton on Torts § 130 at 1005 & nn.1-5 (5th ed.
1984); Restatement of Torts § 766 cmt. b, at 50-51 (A.L.I. 1939) (“Restatement (First)”).
But Lumley’s recognition of a TIC claim in 1853 “began the development of inducement
of breach of contract as a separate tort.” Restatement (First), supra, at 51. Still, the proper
contours of a TIC and TIBE claim remained murky. As one law professor wrote in 1923, “[t]he
action for inducing breach of contract as we know it today is an ingénue in the law whose
characteristics and limitations, in spite of its growing importance, have not yet been determined
or agreed upon.” Francis B. Sayre, Inducing Breach of Contract, 36 Harv. L. Rev. 663, 663
(1923).
III. Treatment under the First and Second Restatements
The first Restatement of Torts attempted in 1939 to codify the doctrinal parameters of
TIC and TIBE claims. Section 766 covered both claims, stating the general principle that “one
who, without a privilege to do so, induces or otherwise purposely causes a third person not to
(a) perform a contract with another, or (b) enter into or continue a business relation with another
is liable to the other for the harm caused thereby.” Restatement (First), supra, § 766, at 49. The
Restatement (First) recognized seven privileges that could be asserted as defenses:
the privilege of competition (§ 768);
the privilege of one having a financial interest in the business of the person
induced (§ 769);
- 23 - the privilege of a person responsible for the welfare of another (§ 770);
the privilege of one with an economic interest in another’s business policy
(§ 771);
the privilege to provide honest advice in the scope of what was requested (§ 772);
the privilege to assert a bona fide claim (§ 773); and
the privilege to break a restriction violative of public policy (§ 774).
Id. at 71-90. The list of potential privileges was not exhaustive. Id. § 767 cmt. a, at 63. The ALI
explained that, “[u]nlike the law of defamation, this branch of the law has not crystallized a
complete set of definite rules as to the existence or non-existence of privilege.” Id.
To provide guidance on other possible privileges, the Restatement (First) set forth five
factors in § 767 to be considered when determining if the defendant’s conduct was privileged:
(a) the nature of the actor’s conduct,
(b) the nature of the expectancy with which his conduct interferes,
(c) the relations between the parties,
(d) the interest sought to be advanced by the actor and
(e) the social interests in protecting the expectancy on the one hand
and the actor’s freedom of action on the other hand.
Id. § 767, at 63.
The Restatement (First) did not address how to allocate the burden of proof. It also did
not address whether a party could tortiously interfere with its own contract, let alone whether a
contractual principal’s agent could do so.
The Restatement (Second) in 1979 adjusted the parameters of the TIC and TIBE causes
of action. Section 766, however, was now dedicated to TIC claims alone. It provided:
§ 766. Intentional Interference with Performance of Contract by
Third Party
One who intentionally and improperly interferes with the
performance of a contract (except a contract to marry) between
- 24 -another and a third person by inducing or otherwise causing the
third person not to perform the contract, is subject to liability to the
other for the pecuniary loss resulting to the other from the failure of
the third person to perform the contract.
Restatement (Second) of Torts, supra, at 7. Note the reference to the requirement that the
defendant both intentionally and improperly interfere with the plaintiff’s contract.
TIBE claims were governed by § 766B:
§ 766B Intentional Interference with Prospective Contractual
Relation
One who intentionally and improperly interferes with another’s
prospective contractual relation (except a contract to marry) is
subject to liability to the other for the pecuniary harm resulting from
loss of the benefits of the relation, whether the interference consists
of
(a) inducing or otherwise causing a third person not to enter into or
continue the prospective relation or
(b) preventing the other from acquiring or continuing the
prospective relation.
Id. at 20. To be liable under this section, the defendant must both “intentionally and improperly”
interfere with the plaintiff’s business expectancy. Id.
The drafters thus required for both TIC and TIBE claims “that the interference be both
intentional and improper.” Id. § 767 cmt. a, at 27; see also id. at 6 (“Each [form of the
tortious-interference tort] provides that the interference must be improper.”) (Introductory Note);
accord Prosser, supra, § 129, at 979 (“But neither interference with contract relations nor
interference with prospective advantages necessarily involves falsehood and neither necessarily
involves an independent tort. It may be sufficient for liability that the defendant has acted
intentionally to interfere with a known contract or prospect, that he has caused harm in so doing,
and that he has acted in pursuit of some purpose considered improper.”).
The Restatement (Second) provided little guidance, however, about how to distinguish
between proper and improper conduct. What little guidance it did provide was in § 767. Recall
- 25 -that this section of the Restatement (First) addressed how to identify privileged conduct. The
Restatement (Second) replaced that section with guidance on how to identify “improper”
interference:
§ 767. Factors In Determining Whether Interference Is Improper
In determining whether an actor’s conduct in intentionally
interfering with a contract or a prospective contractual relation of
another is improper or not, consideration is given to the following
factors:
(a) the nature of the actor’s conduct,
(b) the actor’s motive,
(c) the interests of the other with which the actor’s conduct
interferes,
(d) the interests sought to be advanced by the actor,
(e) the social interests in protecting the freedom of action of the
actor and the contractual interests of the other,
(f) the proximity or remoteness of the actor’s conduct to the
interference and
(g) the relations between the parties.
Id. at 26-27.
That guidance was quite weak. For one thing, the drafters left it to the trier of fact to
decide whether conduct is improper “when there is room for different views.” Id. § 767 cmt. l.
They reasoned that doing so would let a jury apply “its common feel for the state of community
mores and for the manner in which they would operate upon the facts in question.” Id. § 767
cmt. l. As Professor Dobbs put it, the improperly requirement is “unrevealing” and the factors in
§ 767 may appeal “not to principled decision-making but to our biases and our subjective
judgments of defendants.” Dan B. Dobbs, Tortious Interference with Contractual Relationships,
34 Ark. L. Rev. 335, 346 & n.52 (1980).
- 26 -For another thing, the drafters did not assign the burden of proof on the question of
improper conduct. They explained that the “tort has not fully developed at this stage,” so “there
is little consensus on who has the burden of raising the issue of whether the interference was
improper or not and subsequently of proving that issue; and it can not be predicted with accuracy
what rule will ultimately develop.” Restatement (Second) of Torts, § 767 cmt. k, at 38.
The Restatement (Second) retained the privileges set forth in the corresponding sections
of the Restatement (First). See Restatement (Second) of Torts, §§ 768-74. The ALI now
clarified, however, that “[i]t is the defendant’s responsibility to raise the applicability of a
privilege and to assume the burden of proving the facts required to sustain it.” Id. at 4-5
(Introductory Note).
Even so, the ALI recognized the overlap between whether the defendant’s conduct is
improper and whether the conduct is privileged: “there is no clearcut distinction between the
requirements for a prima facie case and the requirements for a recognized privilege.” Id. at 5.
The drafters explained that the overlap problem stems from the “considerable disagreement on
who has the burden of pleading and proving certain matters.” Id. They acknowledged not
solving that problem, explaining that “the law in this area has not fully congealed but is still in a
formative stage.” Id. Dean Prosser put it a little more bluntly: the “‘improper’ interference”
requirement “leav[es] a rather broad and undefined tort in which no specific conduct is
proscribed and in which liability turns on the purpose for which the defendant acts, with the
indistinct notion that the purposes must be considered improper in some undefined way.”
Prosser, supra, § 129, at 979.
IV. Virginia’s version of TIC and TIBE claims
Such was the state of the law in 1985 when Chaves first set forth the requirements for a
TIC claim under Virginia law. The defendant architect in Chaves, upset at losing his bid to work
- 27 -for the city, appeared at a public hearing to complain that the plaintiff architect who won the bid
“had no prior experience in this type of project” and that the fee the city had agreed to was “over
50% more than what could be considered a reasonable fee.” 230 Va. at 115. The city canceled
the contract, solicited new bids, and awarded the contract to the defendant architect. Id. at 117.
Ousted from his job, the plaintiff architect sued the defendant architect for tortious interference.
Notably, the Court borrowed the definition of a TIC claim from § 766 of the Restatement
(Second), including the requirement that the defendant must “intentionally and improperly”
interfere with the performance of the contract. Id. at 120. The Court also borrowed the
Restatement (Second)’s “affirmative defense” of “justification or privilege.” Id. at 121. The
Court said that “[s]pecific grounds for the defense, discussed seriatim in [the] Restatement,
supra, §§ 768-772 are: legitimate business competition, financial interest, responsibility for the
welfare of another, directing business policy, and the giving of requested advice.” 7 Id.
Chaves held that the ousted architect properly recovered tort damages against the
defendant architect. Id. at 123. The Court rejected the defendant’s claim that he was simply
engaged in competition and was exercising his freedom of speech at the public hearing. Id. at
121-22.
There was one passage in Chaves that, when read in isolation, could suggest that
improper conduct is not an element of a TIC claim. After quoting § 766 of the Restatement
(Second) to define a TIC claim—including the improper-conduct requirement—the Court
omitted the improper-conduct requirement when listing the elements of the prima facie case:
The elements required for a prima facie showing of the tort are:
(1) the existence of a valid contractual relationship or business
expectancy; (2) knowledge of the relationship or expectancy on the
part of the interferor; (3) intentional interference inducing or
causing a breach or termination of the relationship or expectancy;
7
Chaves omitted, without explanation, two other justification defenses: asserting a bona fide claim (§ 773) and the privilege to break a restriction violative of public policy (§ 774).
- 28 -and (4) resultant damage to the party whose relationship or
expectancy has been disrupted.
Id. (citing Calbom v. Knudtzon, 396 P.2d 148, 151 (Wash. 1964)).
Did that passage intend to do away with the Restatement (Second)’s improper conduct
requirement? Not likely. After all, the Court defined a TIC claim by reference to § 766 of the
Restatement (Second). And the Court concluded its discussion of liability by saying that “[t]he
tort complained of here is an intentional wrong to the property rights of another, accomplished
by words, not defamatory in themselves, but employed in pursuance of a scheme designed
wrongfully to enrich the speaker at the expense of the victim.” Id. at 122 (emphasis added).
Still, the Court’s later treatment of TIBE claims added to the uncertainty over the status
of the improper-conduct requirement for a TIC claim. Two years after Chaves, our Supreme
Court held that a plaintiff stated a valid TIBE claim against the defendant.8 Duggin v. Adams,
234 Va. 221, 229 (1987). Duggin observed that the rules set forth in Chaves for tortiously
interfering with “a contract for a definite term” did not apply to a contract “terminable at will” in
which a contracting party has “only an expectancy of future economic gain, and . . . no legal
assurance that he will realize the expected gain.” Id. at 226. The Court said that allowing
recovery “on a mere showing that a third party’s intentional interference with a contract
terminable at will caused damage requires too little of the plaintiff.” Id. The Court permitted a
TIBE claim, however, as long as the plaintiff could “allege and prove not only an intentional
interference that caused the termination of the at-will contract, but also that the defendant
employed ‘improper methods.’” Id. at 227 (quoting Hechler Chevrolet v. Gen. Motors Corp.,
8
The Court first recognized a TIBE claim in 1984. See Allen Realty Corp. v. Holbert, 227 Va. 441, 449 (1984) (“We have not decided any cases based upon interference with a prospective contract, but courts in other jurisdictions have recognized such a cause of action.”). But the cause of action had antecedents in an earlier case. See Bhd. of R.R. Trainmen v. Vickers, 121 Va. 311, 312-13 (1917) (holding that the complaint stated a cause of action where the union interfered with the plaintiff-employee’s seniority rights, resulting in lost pay).
- 29 -230 Va. 396, 402 (1985)). By requiring “improper methods” for TIBE claims, Duggin might
have been read to suggest by negative implication that improper conduct is not an element of a
TIC claim.
That inference is unwarranted. Chaves was clear that a TIC claim lies against one who
“intentionally and improperly” interferes with the plaintiff’s contract. 230 Va. at 120 (quoting
Restatement (Second) of Torts, supra, § 766). The Court has repeated that language multiple
times. See Francis Hosp., Inc. v. Read Props., LLC, 296 Va. 358, 363 (2018); Dunn,
McCormack & MacPherson v. Connolly, 281 Va. 553, 558 (2011); DurretteBradshaw, P.C. v.
MRC Consulting, L.C., 277 Va. 140, 144 (2009). And in Maximus, Inc. v. Lockheed Information
Management Systems, Co., 254 Va. 408 (1997), the Court said that plaintiffs in both TIC and
TIBE cases “must show that the methods of interference were improper.” Id. at 415.
Even so, the lack of doctrinal clarity has resulted in confusion. Very little Virginia
caselaw defines the boundary of improper conduct for a TIC claim. The current Model Jury
Instructions for TIC claims omit any requirement for the plaintiff to show that the defendant’s
conduct was improper. See Model Jury Instrs.—Civ. Nos. 40.100, 40.150. For a TIBE claim, by
contrast, our Supreme Court has elaborated on the nature of improper methods at some length.
Improper methods include not only conduct that is “illegal or independently tortious,” but also
“violence, threats or intimidation, bribery, unfounded litigation, fraud, misrepresentation or
deceit, defamation, duress, undue influence, misuse of inside or confidential information, or
breach of a fiduciary relationship.” Duggin, 234 Va. at 227. Methods are also improper if they
- 30 -“violate an established standard of a trade or profession,” “involve unethical conduct,” or
“[s]harp dealing, overreaching, or unfair competition.”9 Id. at 228.
Notably, the Restatement (Second) does not discuss whether an agent of a
contracting-party promisor may be liable for interfering with the principal’s contract with the
promisee. I agree with the Court that the engineer and architect in this case acted within the
scope of their agency relationship with the Town and are therefore not considered separate
persons for purposes of tortious-interference or conspiracy claims. But the doctrinal basis for
that ruling cannot be found in the framework for TIC and TIBE claims in the Restatement
(Second).
What is more, the agency approach used here is probably not how the drafters of the
Restatement (Second) expected a case like this to play out. In fact, some of the affirmative
defenses to TIC and TIBE claims in the Restatement (Second) assume that the defendant will be
an agent of a contracting party. For example, § 772 establishes an affirmative defense to a
defendant who provides truthful information or honest advice to one of the contracting parties.
§ 772 Advice as Proper or Improper Interference
One who intentionally causes a third person not to perform a
contract or not to enter into a prospective contractual relation with
another does not interfere improperly with the other’s contractual
relation, by giving the third person
(a) truthful information, or
(b) honest advice within the scope of a request for the advice.
The drafters explained that this privilege would protect “the lawyer, the doctor, the clergyman,
the banker, the investment . . . counselor, and the efficiency expert [who] need this protection for
9
But causing the breach of a noncompetition agreement is not an improper method in itself, at least in the context of a TIBE claim. See Preferred Sys. Sols., Inc. v. GP Consulting, LLC, 284 Va. 382, 404 (2012) (“[W]e hold that the breach of a noncompete clause is not in itself an improper method or means.”).
- 31 -the performance of their task.” Id. cmt. c, at 50. “The interference in this instance is clearly not
improper.” Id. § 772 cmt. b, at 50. Those putative defendants advising their principals are akin
to agents like the engineer and the architect advising the Town in this case.
It may be quite problematic, however, for the Restatement (Second) to saddle agents who
have acted in good faith with the burden to prove that they did so. Such defendants will incur
significant litigation costs until they can win at trial or on a dispositive motion based on the
honest-advice privilege. Why shouldn’t the plaintiff bear the burden of alleging and proving that
the defendant intentionally interfered with the contract by giving false information to the
principal or by acting in bad faith?
V. Virginia’s partial alignment with the Restatement (Third)’s approach
The Restatement (Third), published in 2020, clarified several aspects of the TIC and
TIBE causes of action. The ALI was admirably self-critical of its unfinished work in the
Restatement (Second), admitting that the prior “framework was not notably clear, and courts and
commentators were not complimentary of it.” Restatement (Third), supra, § 17 cmt. b, at 169.
Section 17 addresses TIC claims. It more explicitly articulates the requirement to show
improper conduct—renamed “wrongful conduct”—as part of the plaintiff’s prima facie case:
§ 17 Interference with Contract
(1) A defendant is subject to liability for interference with contract
if:
(a) a valid contract existed between the plaintiff and a third
party;
(b) the defendant knew of the contract;
(c) the defendant engaged in wrongful conduct as defined in
Subsection (2);
(d) the defendant intended to cause a breach of the contract or
disruption of its performance;
- 32 -(e) the defendant’s wrongful conduct caused a breach of the
contract or disruption of performance; and
(f) the plaintiff suffered economic loss as a result.
2) Conduct is wrongful for purposes of this Section if:
(a) the defendant acted for the purpose of appropriating the
benefits of the plaintiff’s contract;
(b) the defendant’s conduct constituted an independent and
intentional legal wrong; or
(c) the defendant engaged in the conduct for the sole purpose of
causing harm to the plaintiff.
Id. § 17, at 136.
That standard aligns with the result in Chaves. The defendant architect’s conduct there
would have qualified as “wrongful” because he tried and succeeded in “appropriating the
benefits of the plaintiff’s contract” under § 17(2)(a). See Chaves, 230 Va. at 122 (“a scheme
designed wrongfully to enrich the speaker at the expense of the victim”). Such alignment is not
coincidental. The ALI explained that the “framework of [§ 17 of the Restatement (Third)] is
meant to promote clarity and predictability. It is not intended to cause substantial changes in the
results produced by the tests and privileges in the Restatement Second.” Restatement (Third),
supra, cmt. a, at 137.
Section 18 describes the prima facie case for a TIBE claim and likewise requires
wrongful conduct—an “independent and intentional legal wrong”—as part of the plaintiff’s
prima facie case:
§ 18 Interference with Economic Expectation
A defendant is subject to liability for interference with economic
expectation if:
(a) the plaintiff had a reasonable expectation of economic
benefit from a relationship with a third party;
- 33 -(b) the defendant committed an independent and intentional
legal wrong;
(c) the defendant intended to interfere with the plaintiff’s
expectation;
(d) the defendant’s wrongful conduct caused the expectation to
fail; and
(e) the plaintiff suffered economic loss as a result.
Restatement (Third), supra, § 18, at 160. Wrongful conduct for a TIBE claim “must have been
wrongful in some way recognized elsewhere by the law.” Id. cmt. b, at 161.10 That standard also
appears to align with Duggin’s list of improper methods for TIBE claims, see 234 Va. at 227-28,
set forth above.
By specifying what constitutes “wrongful conduct” respectively for TIC and TIBE
claims, the Restatement (Third) eliminates any need for the unhelpful seven-factor test for
improper conduct in the Restatement (Second); it also reduces the number of “privileges” to be
litigated as affirmative defenses. Restatement (Third), supra, at 154 (Reporter’s Note a). For
both TIC and TIBE claims, just three privileges may need to be litigated:
10
The drafters elaborated:
Liability may be found, for example, if the defendant’s act
amounted to a tort such as fraud, defamation, or breach of fiduciary
duty. Liability may likewise be found if the defendant’s act was
criminal, or if it otherwise violated a statute or regulation;
interference achieved by commission of equitable wrongs, such as
duress, may also serve as a basis for recovery. Liability should not
be imposed, however, if the defendant’s act amounted only to
‘sharp practice’ or unethical behavior. The law does not condone
such conduct but does not treat it as a basis for liability in tort. Nor
will an act of negligence or a breach of contract suffice to support
liability under this Section.
Restatement (Third), supra, § 18 cmt. b, at 161.
- 34 -§ 20 Interference with Contract: Privileges
Conduct that otherwise would subject a defendant to liability under
this Chapter is privileged if it consists of:
(a) lawful disclosure of truthful facts to another;
(b) lawful and good-faith efforts to protect a legal interest; or
(c) lawful and good-faith efforts to protect an economic interest
in the contractual relationship at issue.
Id. § 20, at 182.
In other words, by incorporating the definition of wrongful conduct into the prima facie
case in §§ 17 and 18, the Restatement (Third) shifts the substance of some of the Restatement
(Second)’s affirmative defenses to the plaintiff’s side of the ledger. “Some conduct that would
have been protected by privileges under the Restatement Second is exempted from prima facie
liability under this Section.” Restatement (Third), supra, § 17 cmt. g, at 142; see also id. § 20
cmt. a (“By its terms, § 17 effectively excludes from liability some forms of conduct that have
traditionally been subject to privilege.”). As a result, “[d]efendants generally may avoid liability
by pursuing their own interests in good faith and by lawful means, so long as they do not attempt
to disrupt the contracts of others for the sake of obtaining the benefits of the contracts for
themselves.” Id. § 17 cmt. f, at 141.
For example, “no liability arises when a defendant’s lawyer, or another party, offers
disinterested advice that causes the recipient to breach a contract.” Id. § 17 cmt. g, at 143. The
ALI offers a helpful illustration that resembles Allegheny’s claim that the engineer and architect
advised the Town to deny its contractual claims:
Hospital sends a large bill to Patient. Patient hires Consultant to
evaluate Hospital’s charges. Consultant advises Patient that several
of Hospital’s charges are excessive and should not be paid. Patient
refuses to pay the charges. Even if Patient’s refusal is later found to
be a breach of contract, Consultant is not subject to liability to
Hospital under this Section.
- 35 -Id. § 17 cmt. g. illus. 13, at 143. Thus, “no privilege is necessary to protect the provider of
disinterested advice from liability, because disinterested advice does not satisfy the elements of
liability stated in § 17(2).” Id. § 20 cmt. a, at 182.
The changes to the TIC cause of action in the Restatement (Third) are small, but the
practical effects on litigation could be significant. Under the Restatement (Second)’s approach,
Hospital’s TIC suit against Consultant under the facts of Illustration 13 may have survived
demurrer, forcing Consultant to answer and respond to discovery while asserting § 772(b)’s
affirmative defense of honest advice. Under the Restatement (Third)’s approach, by contrast,
Hospital’s TIC claim likely gets dismissed on demurrer if the plaintiff cannot plausibly allege
wrongful conduct.
The Restatement (Third)’s approach also aligns better with the agency rules the Court
applies here to resolve this appeal. See Charles E. Brauer Co., v. NationsBank of Va., N.A., 251
Va. 28, 36 (1996) (holding that bank’s loan-servicing company was not a separate entity for
purposes of conspiracy); see also Perk v. Vector Res. Grp., 253 Va. 310, 317 (1997) (holding that
a company and its law firm were “not separate entities” that conspired). A TIC claim under the
Restatement (Third) will not lie against the employee of a contracting party unless the employee
acted “outside the . . . scope of employment.” Restatement (Third), supra, § 20 cmt. o, at 153.
The plaintiff bears the burden of proof, and it generally must be
discharged by proving that the defendant was motivated entirely by
personal gain at the corporation’s expense. Mixed motives will not
suffice. The bar is kept high because corporations can act only
through their agents. It should not be easy for a party to turn a
contract claim against a corporation into a tort claim by attacking
those through whom the corporation carries out its business.
Id. The Restatement (Third) extends that principle as well “to other agents who are sued for
interfering with the relationship between the plaintiff and the agent’s principal.” Id. Our
Supreme Court relied on the same reasoning in deeming an entity’s law firm, Perk, 253 Va. at
- 36 -314, and a bank’s loan-servicing company, Brauer, 251 Va. at 36, to be mere agents who—when
acting within the scope of their employment—could not conspire with their principal. “To
recover from an agent in those circumstances, the plaintiff must show that the acts at issue were
outside the agent’s scope of authority.” Restatement (Third), supra, § 17 cmt. o, at 153.
***
Barring TIC, TIBE, and conspiracy claims against the agents of contractual promisors
who act within the scope of their employment aligns Virginia tort law with the rules in the
Restatement (Third). In an appropriate case, our Supreme Court may wish to consider whether
to adopt the rest of the Restatement (Third)’s approach to handling TIC and TIBE claims. Doing
so would dispel the confusion of those who incorrectly think that improper or wrongful conduct
is not an element of a TIC claim. It would clarify the type of conduct that is wrongful for TIC
and TIBE claims. And it would reduce from seven to three the number of affirmative defenses
that may need to be litigated in a tortious-interference case.
- 37 -