Title: Banks v. Mario Industries

State: virginia

Issuer: Virginia Supreme Court

Document:

Present:  Hassell, C.J., Keenan, Koontz, Kinser, and Lemons, 
JJ., and Russell and Lacy1, S.JJ. 
 
BETTE L. BANKS 
 
v.  Record No. 061348 
 
MARIO INDUSTRIES OF VIRGINIA, INC. 
 
OPINION BY JUSTICE DONALD W. LEMONS 
 
 
 September 14, 2007 
TROY COOK, ET AL. 
 
v.  Record No. 061355 
 
MARIO INDUSTRIES OF VIRGINIA, INC. 
 
FROM THE CIRCUIT COURT OF THE CITY OF ROANOKE 
Charles N. Dorsey, Judge 
 
 
In these consolidated appeals from civil actions in which 
a company alleged that certain former employees and agents 
formed a competing business, we consider whether the trial 
court erred by denying a motion to strike, submitting a breach 
of fiduciary duty claim to the jury, submitting a verdict form 
to the jury, instructing the jury, admitting a pre-resignation 
memorandum into evidence, and failing to set aside a punitive 
damages award. 
I. 
FACTS AND PROCEEDINGS 
A. The Parties 
 
These consolidated appeals involve claims by Mario 
Industries of Virginia, Inc. ("Mario"), a lighting 
                     
1 Justice Lacy participated in the hearing and decision of 
this case prior to the effective date of her retirement on 
August 16, 2007. 
 
2
manufacturer and supply company, against its former employee, 
Troy Cook ("Cook"); Cook's new company, Renaissance Contract 
Lighting & Furnishings, Inc. ("Renaissance"); the other 
principal in Renaissance, Joseph Cassell ("Cassell"); and two 
of Mario's former sales representatives, The Darnell Group 
("Darnell") and Bette L. Banks ("Banks"). 
B. Facts 
 
The facts will be stated in the light most favorable to 
Mario, the prevailing party at trial.  Bitar v. Rahman, 272 
Va. 130, 141; 630 S.E.2d 319, 325-26 (2006). 
1. Background 
 
Mario, a company that started more than eighty years ago, 
manufactures and sells lighting products.  Louis Scutellaro 
("Scutellaro"), who purchased Mario from his uncle in 1988, is 
Mario's president, and Delores Scutellaro, his wife, is its 
secretary. 
 
Mario maintains two separate divisions, namely a 
residential retail sales division and a contract lighting 
division ("contract lighting" or "contract sales").  This case 
involves the contract lighting division which sells lighting, 
lamps and other lighting products to hotels, nursing homes, 
and government entities. 
 
Mario did not require its employees to sign non-compete 
or confidentiality agreements.  However, Mario's employee 
 
3
handbook explained that outside employment must not conflict 
with Mario's interests and that employees had an obligation to 
prevent actual or potential conflicts of interest.  Mario's 
employee handbook also specifically addressed the protection 
of confidential information.  Mario's employee handbook 
prohibited: the unauthorized removal of files from the 
computer and information systems, removing or copying Mario's 
documents, removing company property, and personal use of 
Mario's computer and information systems that was detrimental 
to Mario. 
 
Additionally, Mario restricted access to its sales 
figures.  Deidre Frank (“Frank”), the controller at Mario, 
testified that Cook knew sales information was confidential.  
Mario also took steps to protect its customer list that it 
spent eighty years developing and, as Scutellaro testified, 
was “worth millions” to Mario.  Mario also treated as 
confidential its computer assisted drawings, costing sheets, 
target price points, selling prices, and key suppliers.  Mario 
“copyrights [some of its] items,” and its catalogs are 
protected by copyright. 
2. Independent Sales Representatives 
 
Mario uses independent sales representatives in its 
contract sales division to promote and sell Mario's products.  
Each of Mario's sales representatives has an exclusive 
 
4
territory.  Scutellaro explained that "[i]n exchange [for an 
exclusive territory], [Mario] expect[s] their loyalty.  That's 
the way it's done in this industry."  In other words, in 
exchange for an exclusive territory, Mario did not permit its 
sales representatives to represent a competing company. 
 
Mario's sales representatives are not Mario employees.  
Mario does not provide its sales representatives with a 
salary, health insurance, or pension benefits.  Instead, the 
sales representatives are only paid commissions.  Mario's 
commission rate is generally 8%, but that rate may fluctuate.  
Mario withholds no taxes on commissions paid and issues IRS 
1099 forms to its sales representatives rather than W-2 forms.  
Mario pays for the catalogs, swatches, and samples it gives to 
its sales representatives.  Mario also pays most of the sales 
representatives' expenses for attendance at Mario business 
meetings. 
 
Cook began working at Mario in 1990.  Cook, an at-will 
employee, served as the manager for Mario's contract sales 
division from 1995 to November 7, 2003. 
 
Banks was Mario's sales representative in Virginia, 
Maryland, and D.C. from January 26, 1998 until her resignation 
on June 1, 2004.  Banks testified that she "was a contract 
agent, an independent sales representative" and "was not an 
employee of Mario." 
 
5
 
Darnell Group is a sales organization formed by Joseph 
Darnell in 1992.  Darnell was Mario's sales representative for 
Illinois and Michigan from 1988 through the date of its 
resignation on January 29, 2004. 
3. Cook Forms Renaissance and Leaves Mario 
 
In March 2003, Cook considered leaving Mario to establish 
his own business.  Cook prepared a memorandum ("Renaissance's 
business plan") outlining some of his ideas and ambitions.  
Cook intended for his business, Renaissance, a lighting and 
furniture manufacturer, to compete with Mario's contract sales 
division.  Cook also contacted Cassell, who had previously 
been the warehouse manager for Passport, a Mario company, 
about forming Renaissance.  At that time, Cassell was working 
on his own plans to start a metal furniture manufacturing 
business.  Cassell was unfamiliar with contract lighting, so 
Cook shared Renaissance's business plan with Cassell. 
 
Renaissance's business plan contained confidential 
information about Mario's growth rate, yearly sales totals, 
past projects, target price points for customers, profit 
margin, vendor lists, key accounts and suppliers, marketing 
plans and strategies, production costs, commissions, trade 
secrets, and intellectual property.  Cassell and Cook admitted 
that it was improper for Cook to reveal Mario's confidential 
information.  Cassell also admitted that he would not want his 
 
6
competitor to have this information.  Cassell admitted that 
the information about Mario's business helped Renaissance 
become "highly competitive." 
 
By April 2003, Cook and Cassell had selected 
Renaissance's name, chosen a facility, and created company 
letterhead.  Renaissance was incorporated in October 2003.  
From March to November 2003, Cook and Cassell were 
Renaissance's two employees.  Cassell was the president of 
Renaissance, and Cook was the vice president. 
 
Cook worked for Renaissance while employed by Mario and 
did so during normal working hours at Mario.  Cook and Cassell 
planned to take fifteen of Mario's sales representatives to 
Renaissance.  While employed at Mario, Cook spoke to at least 
three sales representatives about Renaissance, including 
Darnell. 
 
Prior to his resignation, Cook sought legal advice with 
regard to his resignation.  He prepared a memorandum for his 
attorney on a computer owned by Mario summarizing issues 
regarding Mario, the contract lighting industry, Cook's 
planned resignation, and Renaissance ("pre-resignation 
memorandum").  In the pre-resignation memorandum, Cook stated: 
"I feel sure I will be presented with opportunities for 
previously negotiated projects.” 
 
7
 
When Cook resigned in November 2003, Cook gave Scutellaro 
a letter indicating that he left company information in a box 
in his office.  However, Scutellaro did not find the box.  
Cook's business cell phone was returned to Mario, but the cell 
number was not.  Cook also deleted emails, quotes, files, and 
electronic spreadsheet forms from his computer.  Mario's 
forensic computer expert testified that he found documents 
related to the formation of Renaissance on the hard disk drive 
of the computer Cook had used at Mario.  The forensic expert 
also recovered the pre-resignation memorandum.  The computer's 
hard drive also contained an electronic spreadsheet showing 
all of the open projects associated with the Hilton Garden 
Inns, a chain of hotels owned by a hotelier who was, at the 
time, one of Mario’s most significant customers.  All of these 
documents had been printed from Mario's computer. 
 
Cassell admitted that it was wrong for a sales 
representative to take a contract from one manufacturer to 
another.  Nevertheless, after he resigned, Cook testified that 
he "encouraged" Mario's sales representatives to send business 
to Renaissance.  Cook also used Mario's business phone book, 
which contained valuable and confidential contact information 
for Mario's customers, vendors, and sales representatives, to 
help him at Renaissance.  Cook and Cassell used Mario's 
confidential information to obtain financing for Renaissance.  
 
8
Also, Renaissance took Mario's vendor and customer list and 
Mario's pricing and sales figures "to use to their advantage." 
4. Banks and Darnell Help Renaissance 
 While Still at Mario 
 
 
Banks testified that Cook and Cassell did not ask or 
encourage her to divert projects from Mario to Renaissance.  
Nevertheless, after Cook resigned from Mario, Banks 
"pretended" to be Mario's sales representative.  Banks thought 
Mario trusted her.  Banks, however, admitted that she "had no 
loyalty to Mario at all," and her only “boss” is her 
“checkbook.”  Banks admitted that confidential quotes should 
normally not be sent to competitors because the information is 
"commercially sensitive" to Mario.  Banks also knew that Mario 
expected her to act as its representative, and “if [she] did a 
deal with a customer for which [Mario] gave a quote, [Mario] 
would be the manufacturer.”  Banks knew that Mario would not 
let her represent both Mario and Renaissance.  Banks, however, 
admitted that, while representing Mario, she sent quotes to 
Renaissance instead of sending them to Mario.  Even Cook 
conceded that Banks was disloyal to Mario and acted in her own 
best interest.  Banks would send a confidential Mario quote to 
a competitor if "it was to [her] advantage" and "[i]f it means 
putting a dollar in my checkbook." 
 
Banks diverted the following projects from Mario to 
Renaissance: Residence Inn Capitol, Fisherman's Wharf, 
 
9
Sheraton Key Largo, Big Sur Lodge, and Annapolis Marriott.  
Banks explained that she did this because she felt that "[i]t 
would have either cost Mario money or Bette Banks money.  I 
think that Mario has a whole lot more money than I do."  On 
June 1, 2004, Banks resigned from Mario and joined Renaissance 
because Renaissance offered her a 10% commission.       
 
Similar to Banks, Darnell diverted the Hyatt Deerfield 
project from Mario to Renaissance.  When Scutellaro confronted 
Darnell with this information, he resigned and joined 
Renaissance.     
 
  
C. Causes of Action 
 
Mario sued Banks for damages and in a separate action, 
Mario sued Cook, Cassell, Renaissance, and Darnell.  The two 
suits against Banks and Cook and his co-defendants 
(collectively “the defendants”) were consolidated into a 
single action.  Mario's case proceeded on the following 
theories:  (1) tortious interference with business relations 
(against all the defendants); (2) common law conspiracy 
(against all the defendants); (3) statutory conspiracy 
(against all the defendants); (4) breach of fiduciary duty 
(against Cook, Banks, and Darnell); (5) misappropriation of 
trade secrets (against Cook, Cassell, and Renaissance); and 
(6) conversion (against Cook, Cassell, and Renaissance).   
 
 
10
D. Pre-Trial Objection 
 
Prior to trial, Cook objected, on grounds of attorney-
client privilege, to Mario introducing Cook's pre-resignation 
memorandum into evidence.  The trial court overruled the 
objection. 
E. Alleged Damages & 40% Gross Profit Margin 
At trial, Scutellaro qualified, without objection, as an 
expert in "lighting manufacturing and quoting of lighting 
products."  Scutellaro testified about Mario’s lost revenues 
and lost profits, allegedly resulting from the defendants’ 
actions that caused Mario to lose specific contract lighting 
projects.  Evidence offered by Mario regarding lost revenues 
and lost profits (applying a 40.5434% gross profit margin) was 
as follows: 
PROJECT 
LOST REVENUES 
LOST PROFITS 
Hilton Garden Inn 
$2,000,000   
$810,868   
Benjamin West 
$3,532,400  
$1,419,019  
Fisherman's Wharf 
$48,950  
$19,845.99  
Big Sur Lodge 
$25,793.08  
$10,457.39  
Annapolis 
Marriott 
$37,806.50  
$15,328.04 
Residence Inn 
Capitol 
$12,420  
$5,035.49  
Sheraton Key 
Largo 
$32,615.12  
$13,223.28  
Hyatt Deerfield 
$96,480.62  
$39,116.52  
Other Contract 
Sales 
$876,740  
$400,000  
File Recovery & 
Reconstruction 
N/A 
$25,625.90  
TOTAL 
$6,663,205.32 
$2,758,519.61 
 
 
11
Mario’s lost profits figures were necessarily dependent 
upon Scutellaro applying Mario’s 40.5434% gross profit margin 
to its lost revenues.  When asked what Mario's lost profits 
were with respect to the Benjamin West project, Scutellaro 
testified that Mario's gross profit margin is 40.5434% and 
that it "is calculated by [Mario's] accountant."  The 
defendants then objected "[a]s to entering figures reportedly 
given [to Scutellaro] by his accountant."  Mario's counsel 
indicated that the accountant was present.  The trial court 
sustained the objection on hearsay grounds.  The question was 
posed again.  Notably, the parties did not condition 
Scutellaro's response regarding the 40% gross profit margin on 
Mario's accountant testifying.  Upon posing the question 
again, Scutellaro testified, without objection, that Mario's 
gross profit margin was 40.5434%. 
Mario never called its accountant to testify.  Instead, 
Scutellaro testified about the gross profit margin using an 
exhibit demonstrating Mario’s gross profit margin.  The 
defendants again objected to Scutellaro testifying to Mario's 
40% gross profit margin, arguing that Scutellaro was not 
qualified as an expert in accounting.  The trial court 
overruled the objection, saying "I don't think he is 
testifying as to anything that would require any expertise so 
far." 
 
12
 
Finally, the defendants objected, arguing that Mario did 
not lay a proper foundation to Scutellaro applying the 40% 
gross profit margin to Mario's lost revenues for each of the 
projects.  The trial court overruled the objection on the 
grounds that "the foundation is his knowledge as an owner of 
the business." 
F. Motion to Strike 
At the conclusion of Mario's case in chief and again at 
the conclusion of all of the evidence, the defendants moved to 
strike Mario's evidence.  First, the defendants argued that 
all damage claims based on the 40% gross profit margin should 
be struck.  The defendants argued that the Mario's "basic 
underlying measure of gross profits . . . is so flawed as to 
render the calculations speculative."  The defendants further 
argued that the 40% gross profit margin "is derived by 
calculations that incorporate extraneous factors and look in 
the wrong direction."  Specifically, the defendants claimed 
that "any damages that are derived using the 40 percent figure 
should be struck because the 40 percent figure is so 
inaccurate that it results in speculation or distortion." 
Second, the defendants argued that the damages evidence 
related to certain, specific lost projects should be struck 
either because there was no evidence of what the winning bid 
was for the project, there was no evidence that a purchase 
 
13
order had been issued, the purchasing agent picked a different 
vendor than Mario, or Mario never submitted a bid for the 
projects. 
Finally, the defendants argued that the breach of 
fiduciary duty claim should be struck because Darnell and 
Banks had no fiduciary duty to Mario.  The trial court 
overruled the motion to strike on each of these bases. 
G. Jury Instructions 
The defendants only objected to three of the jury 
instructions.  First, the defendants objected to jury 
instructions 15 and 20 because the instructions were 
"inconsistent with the requirements found in Williams v. 
Dominion Technology Partners, 265 Va. 280[, 576 S.E.2d 752 
(2003)], which requires that the Court determine whether a 
fiduciary duty exists.  That is an issue of law for the Court, 
and that the breach of any such duty is an issue for the 
jury."  Jury instruction number 15 instructed the jury that 
"[t]he issues raised by Mario Industries[’] breach of 
fiduciary duty claim are as follows: 1) Did a fiduciary 
relationship exist between the defendant[s] and Mario 
Industries?  2) If so, did the defendant[s] violate the 
fiduciary obligation?"  Jury instruction number 20 instructed 
the jury to determine whether the defendants "breached a 
fiduciary duty that [they] owed to Mario Industries" and 
 
14
whether the defendants' "breach of fiduciary duty was a 
proximate cause of damage[s] to Mario."  The trial court 
overruled the defendants' objections. 
 
The defendants also objected to jury instruction 16, 
defining the status and duties of an employee.  The defendants 
specifically objected to the portion of Instruction 16 that 
provides that "[e]mployees must exercise the utmost good faith 
and loyalty toward their employer."  The defendants argued the 
language "sets a higher standard than is required by law."  
The trial court overruled the objection.  Other than the jury 
instructions related to fiduciary duty, the defendants did not 
object to any other jury instructions, including any of the 
instructions on common law conspiracy. 
H. Verdict Form 
 
The verdict form was tendered without objection.  The 
verdict form was divided into sections permitting awards on 
different theories and against all or some of the defendants.  
The jury found in favor of Mario and against all of the 
defendants as to Mario's compensatory damages claims, except 
for the statutory conspiracy claim, in the amount of 
$1,528,342.00.  As to punitive damages, the jury found in 
favor of Mario and against Cook in the amount of $56,700.00.  
The defendants filed post-trial motions which were heard and 
denied by the trial court.  The trial court then entered a 
 
15
final order consistent with the jury's verdict.  The 
defendants filed timely notices of appeal to this Court. 
II. ANALYSIS 
A. Standard of Review 
 
We review this appeal under well-settled principles. 
When parties come before us with a jury verdict 
that has been approved by the trial court, they 
hold the most favored position known to the 
law.  The trial court's judgment is presumed to 
be correct, and we will not set it aside unless 
the judgment is plainly wrong or without 
evidence to support it.  We view the evidence 
and all reasonable inferences fairly deducible 
from it in the light most favorable to the 
prevailing party at trial. 
Xspedius Mgmt. Co. v. Stephan, 269 Va. 421, 424-25, 611 S.E.2d 
385, 387 (2005) (quotations and citations omitted).  We review 
matters of law de novo.  Hubbard v. Dresser, Inc., 271 Va. 
117, 122, 624 S.E.2d 1, 4 (2006). 
B. Verdict Form and Damages Instructions 
 
On appeal, Banks argues that the trial court erred “by 
using a verdict form that lumped all of the defendants 
together for the compensatory damage claim (other than 
statutory conspiracy) and in not providing the jury with an 
opportunity to differentiate between the damages recoverable 
against the various defendants.”  Instead, the verdict form 
“lumped” Banks with the other defendants for claims for which 
she was not sued.  Banks also argues that the trial court 
erred “by failing to instruct the jury on the elements of 
 
16
damages which Mario may be entitled to recover.” There was no 
objection made concerning the verdict form; however, Banks 
urges the Court to apply the “plain error doctrine” and 
reverse the trial court because there is "(1) error, (2) that 
is plain, (3) that is substantial and (4) . . . seriously 
affects the fairness, integrity and public reputation of the 
judicial system."  Of course, we consider such challenges 
under the “ends of justice” exception found in Rule 5:25. 
 
As previously mentioned, Banks did not object to the 
verdict form.  Additionally, the trial court was not required 
to instruct the jury, sua sponte, on the elements of damages 
Mario was entitled to recover in the absence of a request from 
Banks to do so.  Because Banks raises these arguments for the 
first time on appeal and we find no reason to invoke the ends 
of justice exception, the arguments are waived.  Rule 5:25. 
C. Breach of Fiduciary Duty 
 
On appeal, Banks challenges the trial court’s decisions 
on Mario’s breach of fiduciary duty claim with the following 
assignments of error: 
1. 
The trial court committed reversible error when it 
refused to determine as a matter of law whether Ms. Banks 
owed a fiduciary duty to Mario and instead submitted to 
the jury the issue of whether a fiduciary relationship 
existed between Ms. Banks and Mario. 
 
2. 
The trial court committed reversible error when it failed 
to strike Mario’s evidence regarding the breach of 
fiduciary duty claim filed against Ms. Banks. 
 
 
17
Cook also challenges the trial court’s decisions on Mario’s 
breach of fiduciary duty claim: 
1. 
The trial court committed reversible error when, despite 
timely objection, it failed to follow the rule 
established in Williams v. Dominion Technology Partners, 
L.L.C., 265 Va. 280, 289, 576 S.E.2d 752, 758 (2003), 
gave instructions Nos. 15, 16, and 20 over objection, 
failed to determine as a matter of law whether defendants 
Darnell Group and Cook owed a fiduciary duty of loyalty 
to the plaintiff, failed to rule as a matter of law on 
the extent of any such duty, and instead submitted the 
existence of the duty to the jury. 
 
2. 
The trial court committed reversible error in overruling 
the defendants’ motions to strike, in giving over 
objection instructions Nos. 15, 16, and 20 submitting the 
existence and breach of a fiduciary duty to the jury, and 
in overruling the defendants’ post-trial motion to set 
aside, where the evidence showed as a matter of law that 
Darnell Group owed no fiduciary duty to the plaintiff and 
where the trial court failed to define and instruct on 
the limited and changing duties Cook owed Mario under the 
circumstances of this case. 
 
 
The trial court did not err in submitting the breach of 
fiduciary duty claim to the jury.  Instruction 17, given 
without objection, stated: 
Agency is a fiduciary relationship between two 
parties in which one party agrees to act on 
behalf of and subject to the control of the 
other party.  In an agency agreement, the 
parties agree that the agent shall act on 
behalf of and subject to the control of the 
principal.  If a party is not an agent, that 
party is not a fiduciary. 
 
In other words, instruction number 17 informed the jury that 
if agency was found, then the agent owed a fiduciary duty to 
the principal.  This instruction became the law of the case.  
Ulloa v. QSP, Inc., 271 Va. 72, 80, 624 S.E.2d 43, 48 (2006). 
 
18
 
Cook was an employee of Mario and admitted he owed Mario 
a duty of loyalty.  Banks admitted that she was Mario's agent 
and that she owed a duty of loyalty to Mario.  These party 
admissions combined with the fact that Banks' job was to 
faithfully represent Mario's interests in her territory, 
support the claim of a fiduciary duty.  Finally, while Darnell 
did not admit that it was Mario's agent, it was a sales 
representative for Mario, under the same circumstances as 
Banks.  Pursuant to the instructions given, the jury could 
have reasonably found that Darnell was Mario's agent.  
Pursuant to instruction 17, once an agency relationship was 
established, Cook, Banks, and Darnell necessarily owed a 
fiduciary duty to Mario. 
D. Pre-resignation Memorandum 
 
Cook next argues that the trial court erred in allowing 
Mario “to introduce into evidence, over objection, the 
confidential pre-resignation memorandum Cook prepared for the 
purpose of seeking legal advice from his lawyer.”  
Specifically, Cook argues that "[t]he trial court violated 
Virginia's longstanding recognition of the sanctity of 
attorney-client communications when it allowed Mario to 
introduce, over objection, and to emphasize repeatedly a 
confidential memorandum that Cook prepared exclusively for the 
 
19
purpose of seeking legal advice from his attorney."  Cook’s 
argument is without merit. 
"Confidential communications between attorney and client 
made because of that relationship and concerning the subject 
matter of the attorney's employment are privileged from 
disclosure, even for the purpose of administering justice."  
Commonwealth v. Edwards, 235 Va. 499, 508-09, 370 S.E.2d 296, 
301 (1988) (quotation omitted).  This privilege, however, is 
not absolute and may be waived.  See Virginia Elec. & Power 
Co. v. Westmoreland-LG&E Partners, 259 Va. 319, 326, 526 
S.E.2d 750, 755 (2000). 
Pursuant to Mario's employee handbook, Mario permitted 
employees to use their work computers for personal business.  
However, Mario's employee handbook provided that there was no 
expectation of privacy regarding Mario's computers.  Cook 
created the pre-resignation memorandum on a work computer 
located at Mario's office.  Cook printed the document from 
this computer, and Cook sent it to his attorney for the 
purposes of seeking legal advice.  Cook then deleted the 
document from the computer.  Mario's forensic computer expert, 
however, retrieved the document from the computer's hard 
drive.  We held in Clagett v. Commonwealth, 252 Va. 79, 92, 
472 S.E.2d 263, 270 (1996), that “the [attorney-client] 
privilege is waived where the communication takes place under 
 
20
circumstances such that persons outside the privilege can 
overhear what is said.”  See Edwards, 235 Va. at 509, 370 
S.E.2d at 301 (“The privilege may be expressly waived by the 
client, or a waiver may be implied from the client's 
conduct.”).  Therefore, we hold that the trial court did not 
err in admitting the pre-resignation memorandum into evidence. 
E. Damages 
 
On appeal, Cook, Cassell, Renaissance, and Darnell 
challenge the damages award, asserting that: 
The trial court committed reversible error in 
overruling the defendants’ motions to strike 
and post-trial motion to set aside regarding 
the plaintiff’s proof of damages where, as a 
matter of law, the plaintiff’s damages evidence 
was speculative, contingent, uncertain, failed 
to show the claimed damages with any reasonable 
certainty, failed to show that the defendants’ 
acts or omissions were the direct and proximate 
cause of the claimed damages, and rested on the 
testimony of an unqualified expert. 
 
Banks also challenges the damages award, asserting that 
“[t]he trial court committed reversible error when it failed 
to sustain the motion to strike Mario’s evidence because its 
proof of damages was speculative, counterfactual, unsupported 
by the evidence, and failed to prove proximate cause.” 
We review the trial court's ruling denying the motion to 
strike in accordance with well-settled principles: 
When the sufficiency of a plaintiff's evidence 
is challenged by a motion to strike, the trial 
court should resolve any reasonable doubt as to 
 
21
the sufficiency of the evidence in plaintiff's 
favor and should grant the motion only when it 
is conclusively apparent that plaintiff has 
proven no cause of action against defendant, or 
when it plainly appears that the trial court 
would be compelled to set aside any verdict 
found for the plaintiff as being without 
evidence to support it. 
 
Saks Fifth Ave., Inc. v. James, Ltd., 272 Va. 177, 188, 630 
S.E.2d 304, 311 (2006) (quotations omitted). 
 
In order to recover damages for lost profits from the 
defendants, Mario  
had the burden of proving with reasonable 
certainty the amount of damages and the cause 
from which they resulted; speculation and 
conjecture cannot form the basis of the 
recovery.  When an established business, such 
as [Mario], is injured, interrupted, or 
destroyed, the measure of damages is the 
diminution in value of the business by reason 
of the wrongful act, measured by the loss of 
the usual profits from the business. 
Id. (quotations and citations omitted).  Therefore, 
where the loss of prospective profits is the 
direct and proximate result of the breach . . . 
and they can also be proved with a reasonable 
degree of certainty, such loss is recoverable, 
but it is equally well settled that prospective 
profits are not recoverable in any case if it 
is uncertain that there would have been any 
profits, or the alleged profits are so 
contingent, conjectural, or speculative that 
the amount thereof cannot be proved with a 
reasonable degree of certainty.  
Id. at 188-89, 630 S.E.2d at 311 (quotations omitted).  
Accordingly, first Mario "must show a causal connection 
between the defendant[s'] wrongful conduct and the damages 
 
22
asserted.  Second, [Mario] must prove the amount of those 
damages by using a proper method and factual foundation for 
calculating damages."  Id. at 189, 630 S.E.2d at 311. 
 
The admissibility of evidence and the sufficiency of 
evidence are distinct issues.  It follows that objections to 
the admissibility of evidence and the sufficiency of evidence 
are also distinguishable. 
 
" '[A]n objection to the admissibility of evidence must 
be made when the evidence is presented.  The objection comes 
too late if the objecting party remains silent during its 
presentation and brings the matter to the court's attention by 
a motion to strike made after the opposing party has 
rested.' "  Bitar v. Rahman, 272 Va. 130, 139, 630 S.E.2d 319, 
324 (2006) (quoting Kondaurov v. Kerdasha, 271 Va. 646, 655, 
629 S.E.2d 181, 185 (2006)).  However, “[i]n some 
circumstances, a defect in an expert witness’ testimony may 
not be apparent until the testimony of that witness is 
completed.”  Id. at 140, 630 S.E.2d at 324-25.  Therefore, an 
objection to the admissibility of the evidence “raised at that 
first opportunity is timely.”  Id.; see also Vasquez v. 
Mabini, 269 Va. 155, 163, 606 S.E.2d 809, 813 (2005).  In 
contrast, 
an objection to the sufficiency of the evidence 
is properly made by a motion to strike, rather 
than when the evidence is first offered. 
Obviously, the objecting party cannot be sure, 
 
23
nor can the court decide, until the offering 
party has rested, whether the various fragments 
of evidence have added up to a justiciable 
whole. 
 
Kondaurov, 271 Va. at 655, 629 S.E.2d at 185-86 (citation 
omitted). 
 
In this case, nothing prohibited the defendants from 
moving to strike Mario’s evidence at the conclusion of its 
case in chief or at the conclusion of all of the evidence.  
However, such a motion testing sufficiency of the evidence 
must be weighed by the evidence that has been admitted.  Here 
Scutellaro qualified as an expert witness in the lighting 
industry.  After a preliminary challenge based upon hearsay, 
the evidence of a 40% gross profit margin was elicited without 
objection.  The trial court observed that Scutellaro was 
testifying from knowledge “as an owner.”  Pursuant to our 
prior holdings in Bitar, Kondaurov, Vasquez, and Countryside 
Corp. v. Taylor, 263 Va. 549, 552 & n.2, 561 S.E.2d 680, 682 & 
n.2 (2002), such evidence was admitted without objection and 
the question of admissibility of this evidence is not the 
proper subject of a motion to strike which tests sufficiency.2 
                     
2 There may be circumstances where evidence is admitted 
conditioned upon further foundational support and the 
satisfaction of that condition may not be known until the 
conclusion of the case-in-chief or at the end of presentation 
of all of the evidence.  The proper motion at that time is a 
motion to exclude the evidence.  Assuming that exclusion of 
the evidence creates deficiencies in the quantum of proof, a 
 
24
1. Hilton Garden Inn 
 
The following evidence regarding Mario’s damages from 
losing the Hilton Garden Inn project was admitted without 
objection.  In 1999, Mario entered “a contract or program” 
with Hilton “making their lighting exclusively for [Hilton 
Garden Inn’s] guest rooms.”  During the course of this 
exclusive contract or program, in April 2003, Cook received a 
request for pricing from Hilton on a Hilton Garden Inn 
project.  In May 2003, Cook submitted a bid for the Hilton 
Garden Inn project without properly working out the pricing.  
Scutellaro testified that “there were no calculations done.  
This was just really a guess . . . I have to assume it was an 
educated guess.”  Scutellaro testified that "[b]ecause of 
[Cook's] improper quote [Mario] lost the job, [Mario] lost the 
business."  Scutellaro further testified that his calculation 
for the project was 10% lower than Cook's calculation for the 
job.  This difference "means the difference between getting a 
job and losing a job."  As a result of losing this project, 
Mario is "no longer the exclusive vendor for lighting for 
Hilton Garden Inn."  Additionally, Scutellaro testified that 
Mario had "a reasonable expectation of getting all of these 
projects." 
                                                                
motion to strike may then test the sufficiency of the 
evidence. 
 
25
 
As a result of losing the Hilton Garden Inn project, 
Mario claimed $2,000,000 in lost revenue and $810,868 in lost 
profits.  Scutellaro testified that he knew who was awarded 
the project; however, he had no evidence of the amount of the 
winning bid.  This evidence was admitted without objection.  
Having been admitted, the evidence was sufficient to support a 
jury finding that Mario would have won the Hilton Garden Inn 
project based on Mario's long-term relationship with Hilton 
and Mario’s contract or program as “the exclusive guest room 
lighting manufacturer” for Hilton Garden Inn. 
2. Benjamin West 
The following evidence regarding Mario’s damages from 
losing the Benjamin West project was also admitted without 
objection.  Mario had a prior working relationship with 
Benjamin West.  Benjamin West solicited bids from Mario and 
two other companies to supply lighting products to unspecified 
buyers.  Cook submitted Mario's bid on his last day of work.  
Scutellaro learned of Cook's bid after Cook resigned when 
Benjamin West contacted Mario to inquire about samples.  When 
Scutellaro reviewed the project's file, Scutellaro learned 
that Cook attended a meeting in September 2003 with the 
president of Benjamin West and two other lighting 
manufacturers.  Scutellaro testified that he reviewed Cook's 
notes from the meeting with Benjamin West and testified that 
 
26
"this [wa]s not a speculation project, this [wa]s [a] 
reality."  Scutellaro asserted that Cook "ball parked" the 
pricing for the project, failing to do the work necessary to 
get an accurate quote.  Scutellaro testified that Cook “did 
nothing to quote this three and a-half million dollar project, 
potentially a $30 million project.”  Scutellaro also testified 
that Cook submitted a bid to Benjamin West that was a million 
dollars too high.  Scutellaro stated that "because of [Cook's] 
bogus bid, [Benjamin West] had eliminated us from the 
project." 
As a result of losing the Benjamin West project, Mario 
claimed $3,532,400 in lost revenue and $1,419,019 in lost 
profits.  Scutellaro testified that Ashley Lighting won the 
project.  The evidence was admitted without objection.  Having 
been admitted, the evidence was sufficient to support a jury 
verdict finding that Mario would have won the Benjamin West 
project based on Mario's long-term relationship with Benjamin 
West. 
The combined lost profits from the Hilton Garden Inn 
project, $810,868, and the Benjamin West project, $1,419,019, 
were $2,229,887, exceeding the compensatory damages award.  We 
hold that the evidence was sufficient to support the jury’s 
conclusion that the defendants’ wrongful conduct caused 
Mario’s damages and that there was sufficient evidence from 
 
27
both the Hilton Garden Inn project and the Benjamin West 
project to support the compensatory damages award.  
Accordingly, we need not consider the remaining projects from 
which Mario alleges damages.  Bitar, 272 Va. at 141, 630 
S.E.2d at 325-26 (“[W]here the trial court has declined to 
strike the plaintiff's evidence or to set aside a jury 
verdict, the standard of appellate review in Virginia requires 
this Court to consider whether the evidence presented, taken 
in the light most favorable to the plaintiff, was sufficient 
to support the jury verdict in favor of the plaintiff.”). 
Additionally, the evidence was sufficient to support the 
compensatory damages verdict against all the defendants.  As 
previously noted, some theories of recovery were not asserted 
against all the defendants.  However, on the claim of common 
law conspiracy, each of the defendants was alleged to have 
conspired with the others to injure Mario in its legitimate 
business expectations.  The jury instructions on the subject, 
given without objection, were: 
Jury Instruction No. 7 
 
The issues with regard to Mario Industries 
common law conspiracy claim are as follows: 
1).  Did two or more defendants combine to 
accomplish, by some concerted action, a 
criminal or unlawful purpose; or 
2).  Did two or more defendants combine to 
accomplish, by some concerted action, a lawful 
purpose by criminal or unlawful means. 
 
28
On either of these issues, the plaintiff 
has the burden of proof by the greater weight 
of the evidence. 
 
Jury Instruction No. 8 
 
A common law conspiracy consists of two or 
more persons combining to accomplish, by some 
concerted action, some criminal or unlawful 
purpose or some unlawful purpose by criminal or 
unlawful means. 
 
Jury Instruction No. 9 
 
No cause of action for common law 
conspiracy may exist without resulting injury 
and the damage produced must arise as the 
effective result of the conspiracy. 
 
Jury Instruction No. 10 
 
You shall find for Mario Industries on its 
claim of common law conspiracy and against the 
defendants, or two or more of them, if it 
proves by a preponderance of evidence either 
that: 
1).  Two or more defendants combined to 
accomplish, by some concerted action, a 
criminal or unlawful purpose which resulted in 
damage to the plaintiff; and 
2).  Two or more defendants combined to 
accomplish, by some concerted action, some 
lawful purpose by either criminal or unlawful 
means which resulted in damage to plaintiff. 
You shall find for the defendants, or any 
of them, if the plaintiff fails to prove either 
of these elements. 
 
Jury Instruction No. 14  
 
When two or more persons join in a 
conspiracy, then each one is liable for any 
tortious acts of the other that is committed 
within the scope of the conspiracy. 
 
 
29
 
Upon review of the evidence presented, we conclude that 
it was sufficient to support the compensatory damages verdict 
for common law conspiracy against all the defendants. 
F. Punitive Damages 
 
Finally, Cook argues that the trial court erred in not 
setting aside “the punitive damages verdict against Cook, 
because no awardable compensatory damages were proved, and 
because as a matter of law Cook did not act with the required 
level of misconduct and did undertake reasonable efforts to 
ensure that his resignation and subsequent conduct were 
lawful.”  Phrased differently, Cook argues that punitive 
damages should not have been awarded because "the evidence, as 
a matter of law, fails to prove malice, willfulness, or 
wantonness by Cook."  Therefore, the evidence does not support 
a punitive damages award.  Cook's argument is without merit. 
The purpose of punitive damages “is not so much to 
compensate the plaintiff but to punish the wrongdoer and to 
warn others,” and such damages “may be recovered only where 
there is misconduct or actual malice, or such recklessness or 
negligence as to evince a conscious disregard of the rights of 
others.”  Hamilton Dev. Co. v. Broad Rock Club, 248 Va. 40, 
45, 445 S.E.2d 140, 143 (1994) (quotation omitted).  Jury 
instruction 47, given without objection, defined “actual 
malice” as ”a sinister or corrupt motive such as hatred, 
 
30
personal spite, ill will, or a desire to injure the 
plaintiff.” 
In this case, Cook formed Renaissance while he was 
employed at Mario, and Cook admitted that he intended for 
Renaissance to compete with Mario.  Based upon this evidence, 
the jury could have concluded and did conclude that Cook had 
the requisite malice to injure Mario.  We hold that the trial 
court did not err in refusing to set aside the award of 
punitive damages against Cook. 
III. CONCLUSION 
 
For the reasons stated, we will affirm the judgment of 
the trial court. 
Affirmed.