Title: Station #2, LLC v. Lynch
Citation: N/A
Docket Number: 091410
State: Virginia
Issuer: Virginia Supreme Court
Date: June 10, 2010

PRESENT:  Koontz, Kinser, Lemons, Goodwyn, Millette, and Mims, 
JJ., and Carrico, S.J. 
 
STATION #2, LLC 
 
 
 
 
 
 
 
 
 OPINION BY 
v. 
Record No. 091410 
 
     
JUSTICE WILLIAM C. MIMS 
 
 
 
 
 
 
 
 
June 10, 2010 
MICHAEL LYNCH, ET AL. 
 
FROM THE CIRCUIT COURT OF THE CITY OF NORFOLK 
Junius P. Fulton, III, Judge 
 
In this appeal, we consider whether an oral agreement to 
allow Station #2, LLC (“Station #2”) to install soundproofing 
material in a void space between the ceiling of premises leased 
by it and the floor of premises owned by another was made 
unenforceable by the statute of frauds.  We also consider 
claims of fraudulent inducement to contract and statutory 
conspiracy. 
I. 
BACKGROUND AND MATERIAL PROCEEDINGS BELOW 
The circuit court decided this case on demurrers and a 
special plea in bar.  When an issue is decided by the circuit 
court on demurrer, we accept as true the facts alleged by the 
plaintiff, who is entitled to the benefit of all reasonable 
inferences that may be drawn from them.  Hamlet v. Hayes, 273 
Va. 437, 439, 641 S.E.2d 115, 116 (2007).  We also accept the 
plaintiff’s allegations as true when the circuit court takes no 
evidence on a plea in bar.  Gray v. Virginia Sec’y of Transp., 
276 Va. 93, 97, 662 S.E.2d 66, 68 (2008).  Accordingly, we draw 
our facts here from the allegations made by Station #2 as the 
plaintiff below. 
Michael and Lisa Lynch owned a three-story building at 233 
Granby Street in the City of Norfolk.  They conveyed the second 
and third stories to 237 Granby LLC (“237 Granby”), which 
intended to renovate and sell them as condominiums.  In 
December 2004 the Lynches leased the first story to Station #2, 
which intended to operate a restaurant offering music and live 
entertainment.  The lease provided that: 
Tenant will insure that in conjunction with the 
construction of the condominiums located above 
the business that additional soundproofing 
material to be selected by the Tenant with 
professional sound engineering consultants will 
be installed between the ceiling of the Premises 
and the floor of the lower level of the 
condominiums located above the business.  Tenant 
will use reasonable efforts to work in 
conjunction with the builder of the condominiums 
with regard to soundproofing. . . .  The 
[material] is to be of sufficient sound abatement 
characteristic as to effectively minimize noise 
and vibration from the leased premises being 
transmitted to the condominiums and to meet 
Landlord’s covenant of quiet enjoyment passing to 
the owner of the condominiums. 
 
Prior to executing the lease, members of Station #2 
retained a sound attenuation expert and met with Michael Lynch, 
Frank T. Gadams, and representatives of Hourigan Construction 
Corp. (“Hourigan”) to discuss installation of the soundproofing 
material.  Gadams was a principal of Marathon Development 
Group, Inc. (“Marathon”), an agent of 237 Granby in possession 
 
2
of the two upper stories.1  Marathon had hired Hourigan to 
renovate and develop the condominium units. 
Gadams and Marathon agreed to allow Station #2 access to 
the second story to install the soundproofing material in the 
void space between the ceiling of the first story and the floor 
of the second story.  Nevertheless, Hourigan closed the void 
space without informing Station #2’s sound attenuation expert.  
Hourigan claimed it had done so at Gadams’ and Marathon’s 
direction.  The Lynches subsequently refused to intervene on 
behalf of Station #2 with Gadams and Marathon or to allow 
Station #2 to install the soundproofing material in the void 
space through the ceiling of the first story. 
The City of Norfolk began citing Station #2 for violations 
of its noise ordinance in the summer of 2005.  After repeated 
citations the City ordered Station #2 to cease all musical 
performances in February 2006.  Consequently, the restaurant 
suffered a sharp decline in regular patronage.  It also was 
forced to cancel scheduled weddings, wedding rehearsals, and 
parties.  Station #2 informed Michael Lynch that it would 
withhold payment of rent until it was permitted to install the 
                                                 
1 Station #2 alleged that Gadams purchased the upper 
stories “through a company he owned” and the answer filed by 
Gadams and Marathon does not deny that he owns 237 Granby.  We 
infer that Station #2 alleges Gadams, as a principal of 
Marathon and owner of 237 Granby, and Marathon were agents of 
237 Granby. 
 
3
soundproofing material, whereupon he locked Station #2 out of 
the premises.  The restaurant ceased operation. 
Station #2 filed an amended complaint in the circuit court 
alleging breach of contract by Gadams and Marathon (“Count V”), 
fraudulent inducement to contract by Gadams and Marathon 
(“Count VI”), and statutory conspiracy among Gadams, Marathon, 
and the Lynches (“Count VII”).2  The defendants filed demurrers 
to Counts VI and VII, which the circuit court sustained.  
Gadams and Marathon also entered a special plea of the statute 
of frauds to Count V.  They asserted that installing 
soundproofing material in the void space was analogous to 
creating a party wall.  Since an agreement to create a party 
wall would permit Station #2 “to access and occupy the real 
property,” it could not be enforced unless in writing.  The 
circuit court sustained the plea in bar and dismissed the case.  
We awarded Station #2 this appeal. 
II. ANALYSIS 
A.  THE DEMURRERS TO COUNT VI AND VII 
“A demurrer tests the legal sufficiency of facts alleged 
in pleadings, not the strength of proof. . . .  Because the 
decision whether to grant a demurrer involves issues of law, we 
review the circuit court's judgment de novo.”  Augusta Mut. 
                                                 
2 The complaint included other claims against the Lynches 
and Hourigan that have been dismissed or non-suited and are not 
before us in this appeal. 
 
4
Ins. Co. v. Mason, 274 Va. 199, 204, 645 S.E.2d 290, 293 (2007) 
(internal citations and quotation marks omitted).  Station #2 
argues that the circuit court erred in sustaining the demurrer 
to Count VI because the complaint alleged all elements 
necessary for a claim of fraud or fraudulent inducement.  We 
disagree. 
Although we clearly have stated the proposition, we often 
must repeat it:  an omission or non-performance of a duty may 
sound both in contract and in tort, but only where the omission 
or non-performance of the contractual duty also violates a 
common law duty.  Richmond Metro. Auth. v. McDevitt Street 
Bovis, Inc., 256 Va. 553, 558, 507 S.E.2d 344, 347 (1998) 
(citing Foreign Mission Bd. v. Wade, 242 Va. 234, 241, 409 
S.E.2d 144, 148 (1991)); see also Dunn Constr. Co. v. Cloney, 
278 Va. 260, 266-67, 682 S.E.2d 943, 946 (2009); Augusta 
Mutual, 274 Va. at 205, 645 S.E.2d at 293.  The only duty 
Station #2 alleged was contractual:  that Gadams and Marathon 
had agreed to allow Station #2 access to install the 
soundproofing material.  Consequently, Station #2 has not 
pleaded a proper claim for fraud. 
Even if we assume, as Station #2 invites us to do, that 
Gadams’ and Marathon’s agreement induced Station #2 to contract 
with the Lynches, and that Gadams’ and Marathon’s contractual 
duty to allow the installation did not spring from the lease 
 
5
between Station #2 and the Lynches, its fraud claim fails.  
Station #2 contends it relied on its existing agreement with 
Gadams and Marathon when it leased the first story from the 
Lynches.  It further contends that Gadams and Marathon never 
intended to allow Station #2 to install the soundproofing 
material.  Consequently, their promise to do so was a false 
representation of material fact. 
In general, “if a defendant makes a promise that, when 
made, he has no intention of performing, that promise is 
considered a misrepresentation of present fact and may form the 
basis for a claim of actual fraud.”  SuperValu, Inc. v. 
Johnson, 276 Va. 356, 368, 666 S.E.2d 335, 342 (2008); accord 
Richmond Metro. Auth., 256 Va. at 560, 507 S.E.2d at 348.3  
However, Station #2 did not plead sufficiently that Gadams and 
Marathon intended not to allow installation of the 
soundproofing material at the time they promised to do so. 
The only mention of a contemporaneous intent not to 
perform on the promise to permit the installation appears in 
Count VII, the statutory conspiracy claim: 
[A]ll of the defendants were aware that there was 
never an intention by any of them to allow sound 
attenuation materials to be installed . . . or, 
alternatively, they decided at some point to 
                                                 
3 We have expressly rejected the possibility that a false 
promise could satisfy the requirement of a false representation 
of material fact to support a claim of constructive fraud.  
SuperValu, 276 Va. at 368 & n.2, 666 S.E.2d at 342 & n.2. 
 
6
breach their agreements.  In either event, 
whether the promises were false at the inception 
or were agreements that were broken later, the 
defendants deceived the principals of Station #2 
. . . . 
 
Station #2 does not allege that Gadams’ and Marathon’s promise 
was false when made but rather that the Lynches, Gadams, and 
Marathon all agreed to prevent Station #2 from effecting the 
installation, either before or after Station #2 entered into 
the lease.  Accordingly, Station #2’s allegations were 
insufficient to establish a claim of fraudulent inducement.  
The circuit court did not err in sustaining the demurrer to 
Count VI.4, 5 
                                                 
4 Because we find Station #2’s allegations insufficient, we 
do not consider “whether a claim for fraud in the inducement 
exists when the party engaging in the alleged fraudulent 
conduct is not a party to the contract fraudulently induced.”  
Augusta Mutual, 274 Va. at 206 n.4, 645 S.E.2d at 294 n.4. 
5 Our determination that Station #2’s allegations are 
insufficient does not alter the pleading requirements for a 
fraud claim.  We previously said, “[w]here fraud is relied on, 
the pleading must show specifically in what the fraud consists, 
so that the defendant may have the opportunity of shaping his 
defence accordingly, and since fraud must be clearly proved it 
must be distinctly stated.”  Mortarino v. Consultant Eng'g 
Servs., 251 Va. 289, 295, 467 S.E.2d 778, 782 (1996) (quoting 
Ciarochi v. Ciarochi, 194 Va. 313, 315, 73 S.E.2d 402, 403 
(1952)) (quotation marks and alterations omitted).  To satisfy 
this requirement, the plaintiff must state facts which, if 
proved, establish all the elements of the claim.  See, e.g., 
Van Deusen v. Snead, 247 Va. 324, 328-29, 441 S.E.2d 207, 209-
10 (1994) (reviewing argument that a claim for fraud failed to 
allege facts to prove an element). 
False representation of material fact is an element to a 
claim for fraud.  In this case, the alleged “false 
representation” is a mere failure to perform on a promise, 
which is only sufficient if the promisor had no intention of 
 
7
Station #2 also argues that the circuit court erred in 
sustaining the demurrers to Count VII because the complaint 
alleged all elements necessary for a claim of statutory 
conspiracy.  We again disagree. 
Code § 18.2-499 criminalizes conspiracies to “willfully 
and maliciously injur[e] another in his reputation, trade, 
business or profession by any means whatever.”  Code § 18.2-500 
allows victims of such conspiracies to claim treble damages and 
attorney’s fees in a civil action.  “[T]o survive demurrer, an 
allegation of conspiracy, whether criminal or civil, must at 
least allege an unlawful act or an unlawful purpose.”  Hechler 
Chevrolet, Inc. v. General Motors Corp., 230 Va. 396, 402, 337 
S.E.2d 744, 748 (1985).  Station #2 asserts that Gadams, 
Marathon, and the Lynches acted unlawfully by preventing it 
from installing the soundproofing material.  Even assuming the 
defendants conspired among each other, preventing Station #2 
from installing the soundproofing material does not constitute 
an “unlawful act.” 
In Worrie v. Boze, 198 Va. 533, 536, 95 S.E.2d 192, 196 
(1956), we recognized a common law claim of conspiracy by a 
plaintiff who alleged the defendants had conspired to procure 
the breach of a contract.  We commented in Chaves v. Johnson, 
                                                                                                                                                           
performing at the time the promise was made.  SuperValu, 276 
Va. at 368, 666 S.E.2d at 342. 
 
8
230 Va. 112, 119-20, 335 S.E.2d 97, 102 (1985), that such 
claims were embraced by Code §§ 18.2-499 and 18.2-500.6  
However, we presently are of opinion that a conspiracy merely 
to breach a contract that does not involve an independent duty 
arising outside the contract is insufficient to establish a 
civil claim under Code § 18.2-500.7 
To permit a mere breach of contract to constitute an 
“unlawful act” for the purposes of the conspiracy statute would 
be inconsistent with the diligence we have exercised to prevent 
“turning every breach of contract into an actionable claim for 
fraud.”  Dunn Constr. Co., 278 Va. at 268, 682 S.E.2d at 946; 
Augusta Mutual, 274 Va. at 208, 645 S.E.2d at 295; Richmond 
Metro. Auth., 256 Va. at 560, 507 S.E.2d at 348.  Non-
performance of a contractual promise does not, without more, 
create a basis for recovery in tort.  Likewise, we do not 
believe it can rise to the level of an “unlawful act” under 
Code § 18.2-500 for a similar reason:  the duty of performance 
under the contract springs solely from the agreement; the duty 
is not imposed extrinsically by statute, whether criminal or 
                                                 
6 We later cited this comment in Nedrich v. Jones, 245 Va. 
465, 474, 429 S.E.2d 201, 206 (1993).  Retracting this dictum 
does not disturb our decision in Nedrich.  In that case, we 
merely held that it was not sanctionable for an attorney to 
seek treble damages for an alleged conspiracy to breach a 
contract. 
7 Because Station #2 does not state a claim for common law 
conspiracy, we do not consider the common law action for 
conspiracy to procure breach of contract recognized in Worrie.  
 
9
civil, or independently by common law.  Thus, non-performance, 
without more, is not an “unlawful act.” 
Applying this standard, the cases cited by Station #2 are 
distinguishable.  In Commercial Business Systems v. Bellsouth 
Services, 249 Va. 39, 41, 453 S.E.2d 261, 263 (1995), the 
plaintiff alleged an employee of the defendant awarded a 
contract to the plaintiff’s competitor as the result of a 
bribe.  In Advanced Marine Enterprises v. PRC Inc., 256 Va. 
106, 112, 501 S.E.2d 148, 151 (1998), the plaintiff alleged 
that a defendant knew its actions would constitute actionable 
tortious interference, knowingly weighed the cost of damages, 
and purposefully proceeded with its plan to hire employees of 
the plaintiff who were subject to a covenant not to compete.  
In CaterCorp, Inc. v. Catering Concepts, Inc., 246 Va. 22, 26, 
431 S.E.2d 277, 280-81 (1993), the plaintiff alleged that a 
defendant competitor had conspired to work with a person still 
in its employ, in violation of his common law duty of loyalty.  
Similarly, the plaintiffs in Simmons v. Miller, 261 Va. 561, 
578, 544 S.E.2d 666, 676-77 (2001), and Feddeman & Company v. 
Langan Associates, P.C., 260 Va. 35, 46, 530 S.E.2d 668, 675 
(2000), alleged an accompanying breach of fiduciary duty. 
Station #2’s agreements with the Lynches and with Gadams 
and Marathon do not implicate statutory or independent common 
law duties.  Consequently, merely alleging breach of those 
 
10
contracts is insufficient to establish a claim of statutory 
conspiracy under Code §§ 18.2-499 and 18.2-500.  The circuit 
court did not err in sustaining the demurrers to Count VII.8 
B.  THE PLEA IN BAR TO COUNT V 
While “[t]he standards of review for a defensive plea in 
bar and a demurrer are substantially similar,” Sullivan v. 
Jones, 42 Va. App. 794, 802, 595 S.E.2d 36, 40 (2004), “[a] 
plea in bar presents a distinct issue of fact which, if proven, 
creates a bar to the plaintiff’s right of recovery.  The moving 
party has the burden of proof on that issue.”  Hilton v. 
Martin, 275 Va. 176, 179-80, 654 S.E.2d 572, 574 (2008).  A 
circuit court’s judgment that a party has met his burden of 
proof “will be upheld unless it is plainly wrong or without 
evidence to support it.”  Hudson v. Lanier, 255 Va. 330, 333-
34, 497 S.E.2d 471, 473 (1998); see also Upper Occoquan Sewage 
Auth. v. Blake Constr. Co., 266 Va. 582, 590-92, 587 S.E.2d 
721, 725-26 (2003) (reversing judgment on a plea in bar that 
the court sustained without evidence to support it). 
Gadams and Marathon argue that Station #2’s breach of 
contract claim is barred by the statute of frauds.9  However, 
                                                 
8 Because we have determined that Station #2 did not plead 
a proper claim of fraud or fraudulent inducement, that claim 
cannot be the predicate “unlawful act” for Station #2’s 
statutory conspiracy claim. 
9 The statute provides that “[u]nless a promise, contract, 
agreement, representation, assurance, or ratification, or some 
 
11
they have failed to prove that the statute applies.  They argue 
that Station #2 needed an easement to install the soundproofing 
material in the void space.  However, they did not prove that 
237 Granby owned the void space.10  Based upon these facts we 
conclude that Station #2 merely needed a license, i.e., 
permission to enter the second story for the purpose of 
installing the soundproofing material.11 
Permission to enter the real property of another does not 
rise to the level of an easement.  An easement concerns the 
continuing use of real property.  Russakoff v. Scruggs, 241 Va. 
135, 138, 400 S.E.2d 529, 531 (1991) (“Easements are . . . the 
privilege to use the land of another in a particular manner and 
for a particular purpose.”  (quoting Brown v. Haley, 233 Va. 
210, 216, 355 S.E.2d 563, 567-68 (1987)) (internal quotation 
marks omitted)); see also United States v. Blackman, 270 Va. 
68, 76, 613 S.E.2d 442, 445 (2005) (“Easements are described as 
being ‘affirmative’ easements when they convey privileges on 
                                                                                                                                                           
memorandum or note thereof, is in writing and signed by the 
party to be charged or his agent, no action shall be brought 
. . . [u]pon any contract for the sale of real estate, or for 
the lease thereof for more than a year.”  Code § 11-2(6). 
10 At its hearing on the plea in bar, the circuit court 
asked whether Gadams and Marathon wished to introduce evidence.  
They declined and invited the court to rule on the pleadings. 
11 We note that neither Gadams nor Marathon owned the upper 
stories and that 237 Granby is not a party to this action.  
However, while Gadams, Marathon, and 237 Granby are distinct 
legal entities, we infer that Station #2 alleges Gadams and 
Marathon, as agents of 237 Granby, had apparent authority to 
grant Station #2 either a license or an easement. 
 
12
the part of one person . . . to use the land of another . . . .  
Easements are described as being ‘negative’ when they convey 
rights to demand that the owner . . . refrain from certain 
otherwise permissible uses of his own land.”).  Permission 
merely to enter the real property of another without such 
continuing use is a license.  Stanley v. Mullins, 187 Va. 193, 
200, 45 S.E.2d 881, 885 (1948); Power v. Tazewells, 66 Va. (25 
Gratt.) 786, 790 (1875). 
“[T]he grant of an easement is embraced within the statute 
of frauds, and therefore must be in writing.”  Buckles v. 
Kennedy Coal Corp., 134 Va. 1, 15, 114 S.E. 233, 237 (1922) 
(quoting Wynn v. Garland, 19 Ark. 23, 34 (1857)) (internal 
quotation marks omitted).  However, it has long been 
established that a license may be granted orally without 
violating the rule.  Power, 66 Va. (25 Gratt.) at 790.  The 
record establishes nothing more than that 237 Granby owned the 
upper stories.  Moreover, the parties agree that the circuit 
court did not determine the ownership of the void space.  
Without establishing 237 Granby as the owner, Gadams and 
Marathon failed to show there was any real property in their 
possession and control that Station #2 would need to use.  
Absent such a showing, Station #2 required no more than their 
permission to enter the second story. 
 
13
Gadams and Marathon did not prove that the agreement 
required more than the grant of a license to which the statute 
of frauds does not apply.  The circuit court erred in 
sustaining their plea in bar because there is no evidence to 
support it.  We will reverse and remand for trial on Station 
#2’s breach of contract claim.12 
III.  CONCLUSION 
For the reasons set forth above, we will affirm the 
judgment of the circuit court as to both demurrers, reverse the 
judgment sustaining the plea in bar, and remand for trial on 
Station #2’s breach of contract claim. 
Affirmed in part, 
reversed in part, 
                                 and remanded. 
                                                 
12 By inviting the circuit court to rule on the pleadings, 
Gadams and Marathon waived their opportunity to introduce 
evidence supporting the plea in bar. 
 
14