Court Opinion

ID: 9391493
Source: CourtListenerOpinion
Date Created: 2023-05-02 14:13:42.320823+00
Date Added: 2024-06-11T17:18:43.126875
License: Public Domain

COURT OF APPEALS OF VIRGINIA

            Present: Judges O’Brien, Ortiz and Raphael
PUBLISHED

            Argued at Richmond, Virginia

            JOHN E. NESTLER, M.D. AND
             STEPHANIE CALL, M.D.

            v.     Record No. 0497-22-2

            TIZIANO SCARABELLI, M.D.,
             HARRIS D. BUTLER, III AND
             BUTLER CURWOOD, PLC                                                 OPINION BY
                                                                             JUDGE DANIEL E. ORTIZ
            TIZIANO M. SCARABELLI, M.D.                                           MAY 2, 2023

            v.     Record No. 0421-22-2

            KENNETH ELLENBOGEN, M.D.,
             ANTONIO ABBATE, M.D.,
             STEPHANIE CALL, M.D. AND
             MCV ASSOCIATED PHYSICIANS

                            FROM THE CIRCUIT COURT OF THE CITY OF RICHMOND
                                          Phillip L. Hairston, Judge

                          Charles M. Sims (Charles G. Meyer, III; Rachael L. Loughlin;
                          O’Hagan Meyer, PLLC, on briefs), for Kenneth Ellenbogen, M.D.,
                          Antonio Abbate, M.D., Stephanie Call, M.D., MCV Associated
                          Physicians and John E. Nestler, M.D.

                          L. Steven Emmert (Sykes, Bourdon, Ahern & Levy P.C., on briefs),
                          for Tiziano M. Scarabelli M.D., Harris D. Butler, III and Butler
                          Curwood, PLC.

                   When a party or an attorney files an objectively baseless defamation complaint, a trial court

            must impose sanctions under Code § 8.01-271.1. We apply this familiar principle to an acrimonious

            disagreement between several litigants. After hiring Dr. Tiziano Scarabelli, MCV Associated

            Physicians (“MCVAP”) began receiving complaints about Scarabelli’s behavior, resulting in

            intense litigation involving defamation, fraudulent inducement, and sanctions. On appeal,
Drs. Stephanie Call and John Nestler argue that the trial court erred in denying their post-trial

sanctions motions against Scarabelli and his attorney, Harris D. Butler, III, concerning

Scarabelli’s defamation claims and related litigation. Although Scarabelli’s complaint against

Call was objectively reasonable, his complaint against Nestler was baseless, as Nestler’s alleged

defamatory statements did not carry the requisite defamatory “sting.” Thus, we affirm the trial

court’s denial of Call’s motion for sanctions but reverse its denial of Nestler’s motion for

sanctions. On separate appeal, Scarabelli argues that the trial court erred in allowing MCVAP’s

fraudulent inducement counterclaim to go to the jury, claiming that the source of duty rule,

voluntary payment doctrine, Virginia Wage Payment Act, and “Gasque” doctrine preclude such

a claim. See Gasque v. Mooers Motor Car Co., 227 Va. 154 (1984). Because the doctrines cited

by Scarabelli do not apply, we affirm the jury’s verdict on the fraudulent inducement claim.

                                           BACKGROUND

       MCVAP hired Scarabelli as the Virginia Commonwealth University (“VCU”) Health

Systems’ Director of Cardio-Oncology on a one-year contract, from June 2017 to 2018. By

winter, MCVAP had received several complaints from staff members concerning Scarabelli’s

lack of professionalism. Several MCVAP doctors believed that these misunderstandings were

cultural1 and attempted to counsel Scarabelli. MCVAP also received complaints from interns,

residents, and patients that appeared to constitute allegations of sexual harassment, prompting a

Title IX investigation referral. During the investigative process, MCVAP placed Scarabelli on

administrative leave from February to June 2018. It continued to pay Scarabelli’s salary—over

$20,000 per month—during this time. Ultimately, MCVAP chose to not renew Scarabelli’s

contract.

       1
            Referring to Scarabelli’s Italian background.
                                                   -2-
       Scarabelli filed a complaint against Drs. Kenneth Ellenbogen, Antonio Abbate, Nestler,

Call, and MCVAP (collectively, “Defendants”), alleging that they defamed him because he

questioned VCU’s cardiac monitoring process. In an amended complaint, Scarabelli alleged that

Defendants falsely (1) attacked his professionalism and (2) alleged that he committed sexual

misconduct with interns, residents, and fellows “to discredit [him], stop his concerns regarding

the cardiac care of chemotherapy patients, and . . . ruin him professionally.” Scarabelli sought to

prove that Call defamed him when she authored a January 2018 memorandum that stated in part:

               •   “There were some instances where he made some mildly
                   uncomfortable comments to the female NP or patients which
                   were a little inappropriate in nature . . . .”
               •   “From one trainee . . . :
                       o ‘When introducing himself and helping those around
                           him correctly pronounce his name, he would say . . .
                           “Tiziano . . . like tits (grabbing his chest) and ano
                           (pointing to his anus).”’
                       o ‘I remember him stating that “blondes are for dating
                           and brunettes are for marrying.”’
                       o ‘I recall him being very touchy feely, including placing
                           his hands on many of the resident’s thighs, including
                           my own.’
                       o ‘When going to the ED to see a new admission, the
                           fellow and I escorted him down there since he was new
                           and did not know how to get there. Once we got to the
                           ED he began speaking to a female care partner, roughly
                           20-24 years of age, and he then pursued to ask her for a
                           tour. While the fellow and I waited a few minutes for
                           him to return, we asked what he was doing. He said
                           something along the lines of her being very attractive so
                           he asked her to show him around.’
                       o ‘I also remember him mentioning that his wife is sexy a
                           couple times.’”
               •   “I only worked with him for a few days. It was the worst
                   experience of my medical career . . . . Everyone else told me
                   that they felt sorry for me . . . . He was rude; he constantly
                   interrupted, correcting me and dressed me down in front of the
                   team while I tried to present . . . . He made me stand up in
                   front of the entire team to ‘act out’ vectors for EKG reading
                   and said ‘no, not like that, put your hand on your chest . . . .’”
               •   “I have heard negative things about him from other
                   attendings—that their patients complain about him being
                   unprofessional and rude.”
                                               -3-
               •   “He is always putting down other physicians and our
                   healthcare system.”
               •   “He told the interns not to page him.”
               •   “He made reference during rounds recurrently to ‘my beautiful
                   eyes’; it made me uncomfortable . . . . He touched my leg . . . .
                   He made multiple inappropriate comments on rounds . . . . I
                   felt like he tried to come on to me, like he was constantly
                   staring at me . . . . He was constantly complaining about other
                   attendings and making comparisons to past institutions, clearly
                   stating that ours was inferior.”

And Scarabelli sought to prove that Nestler defamed him in making the following statements:2

               •   “Based on multiple complaints raised against you by interns.”
               •   “Concerns that were raised.”
               •   “Multiple complaints have been raised.”
               •   “Administrative leave.”
               •   “Dr. Scarabelli was placed on administrative leave.”

       MCVAP counterclaimed, alleging that Scarabelli fraudulently induced his hiring.

Specifically, MCVAP alleged that Scarabelli submitted a curriculum vitae that he knew

“contained references to fraudulently procured articles published in medical . . . journals” and

“purposefully concealed . . . the true circumstances” of his termination from the University of

Alabama. MCVAP claimed it “would never have employed” Scarabelli had it known the truth.

       Defendants filed a plea in bar and a demurrer to Scarabelli’s amended complaint. On

demurrer, Defendants argued, in part, that the statements by Call and Nestler were not actionable

as defamation. After argument, the trial court overruled Defendants’ renewed plea in bar and

demurrer.

       A six-day consolidated trial followed. After argument, Scarabelli moved to strike,

arguing that MCVAP voluntarily paid his administrative leave and did not sufficiently quantify

       2
        The parties provided a joint interrogatory chart that includes all alleged defamatory
statements. The purpose of this chart was to “amplify the Amended Complaint.”
                                               -4-
its damages. MCVAP countered that their damages were properly quantified3 and that the

voluntary payment doctrine sounds in contract, not tort, and does not apply to fraudulent

inducement claims. Defendants also moved to strike Scarabelli’s defamation claims, arguing

that the statements were true, did not have defamatory “sting,” and were subject to a qualified

privilege. Scarabelli countered that all the statements showed an intent to damage his reputation,

due to his perceived lack of collegiality and cultural differences. Although the trial court took

both matters under advisement, it ultimately refrained from addressing the motions to strike by

joint request of counsel.

       Because Scarabelli agreed to dismiss all defamation claims against Nestler, the jury

considered only these issues: (1) Ellenbogen’s alleged defamation per se, (2) Abbate’s alleged

defamation per se, (3) Call’s alleged defamation per se, (4) MCVAP’s alleged defamation per se,

and (5) MCVAP’s fraud in the inducement claims.4 The jury returned a verdict against

Scarabelli, finding that he failed to prove a prima facie defamation case against the above-named

individuals. It ruled in favor of MCVAP on the counterclaim, awarding compensatory damages

of $102,500 and punitive damages of $143,500.

       Call and Nestler moved for post-trial sanctions on the defamation claims against them.

Scarabelli also filed several post-trial motions, including a motion to set aside the verdict on the

counterclaim and a motion for a new trial. The trial court denied all four motions and entered

final judgment pursuant to the jury’s verdict and its post-trial rulings. These appeals followed.

       3
         Specifically, MCVAP quantified its damages when it stated that it hired Scarabelli but
was unable to fully “utilize” him, as it had to “put him off to the side, but . . . continue to pay
him” for five months. “And that’s our damages, Your Honor. That’s the damage we would not
have incurred if we would not have hired him.”
       4
         The jury did not consider any defamation per quod issues. The court previously granted
a motion in limine precluding introduction of special damages to support Scarabelli’s per quod
claims—effectively striking those claims—as Scarabelli “failed to timely provide the
information in discovery.”
                                               -5-
                                            ANALYSIS

       On appeal, Call and Nestler argue that the trial court erred in denying their post-trial

sanctions motions, stating that Scarabelli’s defamation claims were baseless. On separate

appeal, Scarabelli argues that the trial court erred in allowing MCVAP’s fraudulent inducement

counterclaim to go to the jury and in refusing to set aside the jury’s verdict. We begin with Call

and Nestler’s appeal concerning Scarabelli’s defamation claims and the denial of their post-trial

sanctions motions. After examining the record, we find that Scarabelli’s claim against Call was

not objectively unreasonable but that Scarabelli’s claim against Nestler was baseless and

warranted sanctions. We then address Scarabelli’s appeal of MCVAP’s fraudulent inducement

claim and conclude that the record supports the jury’s verdict. Finally, we find MCVAP’s

damages were appropriate in tort.

                                    I. Call’s and Nestler’s Appeal

                                       a. Standard of Review

       We review the imposition of sanctions under an abuse of discretion standard. Williams &

Connolly, L.L.P. v. People for Ethical Treatment of Animals, Inc., 273 Va. 498, 509 (2007). “A

court always abuses its discretion when it makes an error of law.” Davenport v. Util. Trailer

Mfg. Co., 74 Va. App. 181, 206 (2022). It may also abuse its discretion by: (1) ignoring “a

relevant factor that should have been given significant weight,” (2) “considering and giving

significant weight to an irrelevant or improper factor,” and (3) “committing a clear error of

judgment, even while weighing ‘all proper factors.’” Id. (quoting Lawlor v. Commonwealth, 285

Va. 187, 213 (2013)). “We employ an ‘objective standard of reasonableness’ in evaluating the

written representations” in the motions and pleadings filed with the trial court. Williams &

Connolly, 273 Va. at 510. “On appeal, we view the evidence in the light most favorable to . . .

the party prevailing below”—here, Scarabelli. Black v. Powers, 48 Va. App. 113, 119 (2006).

                                                -6-
       Finally, our appellate review of defamation consists of two steps. First, we look at

whether the defamatory statement was actionable. Whether an alleged defamatory statement is

actionable is a question of law to be reviewed de novo. Jordan v. Kollman, 269 Va. 569, 576

(2005). A statement is not actionable if it “does not contain a provably false factual

connotation,” id. (quoting Fuste v. Riverside Healthcare Ass’n, Inc., 265 Va. 127, 132 (2003)),

or if it does not contain the requisite defamatory “sting,” Schaecher v. Bouffault, 290 Va. 83, 92

(2015). Second, we look at whether the evidence—viewed in the light most favorable to the

prevailing party below—could have supported a jury’s finding that the challenged statements

were false. Jordan, 269 Va. at 576. “Thus, on appeal, we determine only whether there is

sufficient evidence to support the jury’s decision. A trial court’s judgment will not be set aside

unless it is plainly wrong or without evidence to support it.” Id.

                            b. Call and Nestler’s Assignments of Error

       Call and Nestler argue that the trial court erred in denying their motions for sanctions, as

their alleged defamatory statements were true and lacked both malice and defamatory “sting.”

Thus, they argue that Scarabelli’s claims lacked legal merit and warranted sanctions. Because

Scarabelli’s amended defamation complaint against Call was not objectively unreasonable,

Call’s appeal fails. Conversely, Scarabelli’s amended defamation complaint against Nester was

baseless and violated Code § 8.01-271.1 and the trial court erred in denying Nestler’s motion for

sanctions.

             i. The trial court did not abuse its discretion in denying Call’s motion for
                sanctions.

       In defamation5 cases, a plaintiff must show: “(1) publication of (2) an actionable

statement with (3) the requisite intent.” Jordan, 269 Va. at 575. Actionable defamation is “both

       5
          Written defamation is libel; spoken is slander. Jordan, 269 Va. at 575. We make “no
distinction between” libel and slander. Fleming v. Moore, 221 Va. 884, 889 (1981).
                                                -7-
false,” id., and contains “defamatory ‘sting,’” Schaecher, 290 Va. at 92. True statements and

opinions are not actionable. Jordan, 269 Va. at 575-76. Language contains defamatory sting

when it: harms “one’s reputation in the common estimation of mankind”; vilifies, shames, or

disgraces; tends to cause “scorn, ridicule, or contempt”; or “is calculated to render [the subject]

infamous, odious, or ridiculous.” Schaecher, 290 Va. at 92. We give “allegedly defamatory

words . . . their plain and natural meaning[,] . . . to be understood by courts and juries as other

people would understand them, and according to the sense in which they appear to have been

used.” Carwile v. Richmond Newspapers, 196 Va. 1, 7 (1954).

       An attorney’s signature on a pleading, motion, or other paper “constitutes a certificate”

that “(i) he has read the pleading,” “(ii) to the best of his knowledge,” and “after reasonable

inquiry,” he finds that “it is well grounded in fact and is warranted by existing law or a good

faith argument for the extension, modification, or reversal of existing law,” and (iii) “is not

interposed for any improper purpose.” Code § 8.01-271.1. And again, “[w]e employ an

‘objective standard of reasonableness’” when evaluating a party’s “written representations.”

Williams & Connolly, 273 Va. at 510. Thus “we consider whether ‘after reasonable inquiry,

[counsel] could have formed a reasonable belief that the pleading[s] [were] well grounded in

fact, warranted by existing law or a good faith argument for the extension, modification, or

reversal of existing law, and not interposed for an improper purpose.’” Id. (alterations in

original) (quoting Flippo v. CSC Assocs. III, L.L.C., 262 Va. 48, 65-66 (2001)).

       The Supreme Court has stated that if Code § 8.01-271.1 is violated, the trial court must

impose sanctions because the statute uses the words “shall impose.” N. Virginia Real Est., Inc. v.

Martins, 283 Va. 86, 114 (2012). Our Code § 8.01-271.1 is based on the 1983 version of Rule

11 of the Federal Rules of Civil Procedure, as is evidenced by the similar language of Code

§ 8.01-271.1 and its lack of substantive amendment since 1987. See Code § 8.01-271.1(D) (“If a

                                                 -8-
pleading, motion, or other paper is signed or made in violation of this section, the court, upon

motion or upon its own initiative, shall impose upon the person who signed the paper or made

the motion, a represented party, or both, an appropriate sanction . . . [including] the reasonable

expenses incurred because of the filing . . . [and/or] reasonable attorney fees.”). In 1983, Federal

Rule 11 “oblig[ated] [the district court] to impose sanctions once it determined that a signer had

violated Rule 11 . . . [as] ‘the court shall impose’ sanctions if a violation has occurred.”

Benjamin Spencer, Federal Practice & Procedure (Wright & Miller) § 1331 (2022 update). In

1993 and 2007, Rule 11 was amended again. See Fed. R. Civ. P. 11. As a result of the 1993

amendment, its language was changed from obligatory to permissive, now stating that the court

“may” impose sanctions if it finds that Rule 11 was violated. See Fed. R. Civ. P. 11.

Recognizing this, our Supreme Court stated: “the General Assembly had the opportunity to make

discretionary a court’s imposition of sanctions upon finding a statutory violation, but elected not

to do so. Instead, it used the mandatory words ‘shall impose.’” Martins, 283 Va. at 114.

       Thus, we must first determine whether Scarabelli presented a valid defamation claim

against Call. To do so, Scarabelli and his attorney must have complained that Call published,

with malintent, a false statement containing defamatory sting, see Jordan, 269 Va. at 575, and

must have included more than mere conclusory allegations, see A.H. by next friends C.H. v.

Church of God in Christ, Inc., 297 Va. 604, 613 (2019) (quoting Bell Atl. Corp. v. Twombly, 550

U.S. 544, 556 (2007)); Dean v. Dearing, 263 Va. 485, 490 (2002). If they failed to present a

proper and well-grounded defamation case in the amended complaint, motions, discovery, and

other papers, we must then determine whether Scarabelli and his attorney violated Code

§ 8.01-271.1. Finally, if Scarabelli and his attorney violated Code § 8.01-271.1, the trial court

abused its discretion in denying sanctions.

                                                 -9-
       Viewed in the light most favorable to the prevailing party—Scarabelli—the trial court did

not abuse its discretion in denying Call’s sanctions motion. Because Scarabelli and his attorney

presented a valid, non-conclusory defamation claim against Call that appeared well-grounded in

fact, they did not violate Code § 8.01-271.1. See Jordan, 269 Va. at 575 (requiring

“(1) publication of (2) an actionable statement with (3) the requisite intent” in defamation

claims).

       Here, Call published the January 2018 memorandum to several staff members. In the

memorandum, she restated—verbatim—several allegations that Scarabelli had sexually harassed

patients and staff and lacked professionalism. Call’s statements were vivid, not opinion, and

contained sufficient sting to harm Scarabelli’s “reputation in the common estimation of

mankind.” Schaecher, 290 Va. at 92. Because Scarabelli vehemently denied these allegations,

reasonable people could differ as to the veracity of these statements. For example, Call restated

complaints like:

               •   “He was rude; he constantly interrupted, correcting me and
                   dressed me down in front of the team while I tried to present
                   . . . . He made me stand up in front of the entire team to ‘act
                   out’ vectors for EKG reading and said ‘no, not like that, put
                   your hand on your chest . . . .’” and
               •   “He made reference during rounds recurrently to ‘my beautiful
                   eyes’; it made me uncomfortable . . . . He touched my leg . . . .
                   He made multiple inappropriate comments on rounds . . . . I
                   felt like he tried to come on to me, like he was constantly
                   staring at me . . . .”

As such, the truth of Call’s statements in the January 2018 memorandum was a proper question

for the jury, despite Call’s contention to the contrary. Lastly, Scarabelli’s testimony that he

believed Call’s memorandum was made with malintent, in retaliation for his concerns about

VCU’s cardiac monitoring processes, was a proper question of credibility for the jury. For these

reasons, we cannot say that Scarabelli’s claims against Call were “objective[ly]” unreasonable,

                                               - 10 -
Williams & Connolly, 273 Va. at 510, were not “well grounded in fact,” or were “interposed for

an[] improper purpose,” Code § 8.01-271.1.

       While the jury rejected the claims against Call, Scarabelli presented a valid defamation

claim against Call with sufficient evidentiary support. As such, Scarabelli and his attorney did

not violate Code § 8.01-271.1, and the trial court did not abuse its discretion in denying Call’s

motion for sanctions.

        ii. The trial court abused its discretion in denying Nestler’s motion for sanctions.

       Even viewed in the light most favorable to Scarabelli, the trial court abused its discretion

in denying Nestler’s motion for sanctions. As previously stated, we must first determine whether

Scarabelli and his attorney presented a valid defamation claim against Nestler in the amended

complaint, motions, discovery, and other papers. To present a valid defamation complaint

against Nestler, Scarabelli and his attorney must have complained that Nestler published, with

malintent, a false statement containing defamatory sting and must have presented more than

mere conclusory allegations. See Jordan, 269 Va. at 575. If Scarabelli and his attorney failed to

present a prima facie, non-conclusory defamation claim against Nestler, we must then determine

whether they violated Code § 8.01-271.1. And, lastly, if Scarabelli and his attorney violated that

code section, the trial court abused its discretion in denying sanctions.

       Here, Scarabelli failed to present a valid defamation claim against Nestler, as Scarabelli

could not provide a single actionable defamatory statement made by Nestler or present any

evidence at trial that Nestler defamed him. One month before filing the amended complaint,

Scarabelli was deposed and admitted that Nestler made no defamatory statements. Rather,

Scarabelli was upset about Nestler’s actions:

               A:       [I]n a nutshell, what Nestler did . . . it would be difficult for
                        me to come up with a specific sentence.
                           ....

                                                 - 11 -
               Q:      Okay. So I understand you cannot give or, come up with a
                       specific sentence, or words that Dr. Nestler used that were
                       false and defamatory, but your issue with him was his
                       actions enabled the ultimate termination of your
                       employment, the nonrenewal of your contract?
               A:      Yes.
                          ....
               Q:      Okay. So you would agree you don’t have any particular
                       defamatory words that he said, but your issue with
                       Dr. Nestler is his actions?
               A:      The action and the fact that he didn’t . . . try to find a
                       remedy for the wrong which had been done until that point.

Nevertheless, only one month later, Scarabelli and his counsel filed an amended complaint,

alleging that Nestler uttered five defamatory statements: (1) “based on multiple complaints raised

against you by interns,” (2) “concerns that were raised,” (3) “multiple complaints have been

raised,” (4) “administrative leave,” and (5) “Dr. Scarabelli was placed on administrative leave.”

       Several of these statements were undeniably true and, therefore, not actionable. Jordan,

269 Va. at 575-76. Scarabelli does not contest that he was placed on administrative leave.

Instead, he argues that he should not have been placed on administrative leave because it was

retaliatory. But whether Scarabelli’s administrative leave was unjust is not at issue here, only

whether Nestler’s statements were defamatory. Because true statements cannot be defamatory,

statements (4) and (5) cannot constitute actionable defamation. We note that the other

statements appear equally true, as Scarabelli never challenged the fact that complaints were

made, only the content and veracity of those complaints.

       Alternatively, none of the above statements contain the requisite defamatory sting.

Therefore, they were not actionable. As stated above, language contains defamatory sting when

it: harms “one’s reputation in the common estimation of mankind”; vilifies, shames, or disgraces;

tends to cause “scorn, ridicule, or contempt”; or “is calculated to render [the subject] infamous,

odious, or ridiculous.” Schaecher, 290 Va. at 92. We give “allegedly defamatory words . . .

                                               - 12 -
their plain and natural meaning[,] . . . to be understood by courts and juries as other people would

understand them, and according to the sense in which they appear to have been used.” Carwile,

196 Va. at 7. “[B]efore allowing the matter to be presented to a finder of fact,” courts “must

decide as a threshold matter . . . whether a statement is reasonably capable of defamatory

meaning.” Schaecher, 290 Va. at 94.

       In Schaecher, the Supreme Court held that a local planning commissioner’s comment that

an applicant seeking to build a dog kennel “was not totally truthful” did not contain defamatory

sting. Id. at 101-02. But it held that the statement “I firmly believe that [she] is lying and

manipulating facts to her benefit” contains defamatory sting, as this statement could be

reasonably understood as an attack on the applicant’s reputation and character. Id. at 101. In

Bryant-Shannon v. Hampton Roads Cmty. Action Program, Inc., 299 Va. 579 (2021), the

Supreme Court held that a supervisor’s statements in a disciplinary letter did not contain

defamatory sting when those comments merely instructed an employee to change her

unprofessional behavior. Id. at 587-88 (stating, for example, “[y]ou are not allowed to take sick

leave without giving notice to your immediate supervisor prior to the start of the work day . . .”);

see also Theologis v. Weiler, 76 Va. App. 596, 605-08 & n.6 (2023) (finding that twenty-six

allegedly defamatory statements lacked sufficient sting to be actionable).

       Here, Nestler’s statements could not be construed as an attack on Scarabelli’s reputation

or character, as none of these statements are “reasonably capable of defamatory meaning.” See

Schaecher, 290 Va. at 94. Like the statements in Bryant-Shannon, Nestler’s statements

constituted mere observations. As such, Nestler’s statements contained no defamatory sting on

their face and were not actionable defamation. Moreover, Scarabelli and his counsel appeared to

recognize the utter lack of merit in the defamation claims against Nestler—either for truthfulness

                                                - 13 -
or lack of defamatory sting—as they quietly agreed to remove the claim against Nestler from the

jury’s consideration.

       Although sanctions should not be awarded lightly, sanctions must be awarded in certain

circumstances under Code § 8.01-271.1(D). This case is one of those rare circumstances. One

month after Scarabelli stated, under oath, that he could not identify any defamatory statements

made by Nestler, Scarabelli—by and through his attorney—filed an amended complaint stating,

again, that Nestler defamed him. The amended complaint contained no reasonable, actionable

defamatory statements by Nestler. Despite Scarabelli’s inability to identify any defamatory

statement made by Nestler and the utter lack of defamatory sting, Scarabelli and his attorney

nevertheless certified that the amended complaint was “well grounded in fact” and “not

interposed for any improper purpose.” Code § 8.01-271.1. They then forced Nestler to litigate

for several years and participate in a six-day trial, only to drop the case against Nestler at the last

minute because their claim was clearly not well-grounded in fact. Under an “objective standard

of reasonableness,” both Scarabelli and his attorney violated Code § 8.01-271.1 in filing the

amended complaint, motions, and other papers concerning Nestler and in litigating against him

for several years. See Williams & Connolly, 273 Va. at 510.

       As previously stated, when Code § 8.01-271.1 is violated, the trial court must “impose

upon the person who signed the paper or made the motion, a represented party, or both, an

appropriate sanction.” Code § 8.01-271.1(D); Martins, 283 Va. at 114. Because Scarabelli’s

claims against Nestler were clearly not “well grounded in fact” and/or were “interposed for an[]

improper purpose,” Code § 8.01-271.1, the trial court erred in failing to impose sanctions against

Scarabelli and/or his attorney.6 Finally, we note that although the imposition of sanctions was

       6
        We are unable to evaluate the trial court’s reasoning further, as it did not explain its
reasoning when denying Nestler’s motion for sanctions.
                                              - 14 -
mandatory here, the trial court retains discretion to determine the scope of the sanctions on

remand. See Code § 8.01-271.1(D).

                                      II. Scarabelli’s Appeal

                                      a. Standard of Review

       “[W]hether a legal duty in tort exists is a pure question of law to be reviewed de novo.”

Tingler v. Graystone Homes, Inc., 298 Va. 63, 79 (2019). We view the evidence and all

reasonable inferences “in the light most favorable” to the prevailing litigant—here, MCVAP.

Bitar v. Rahman, 272 Va. 130, 137 (2006). Regarding Scarabelli’s wage violation claims,

statutory interpretation is a matter of law which we review de novo. See Montgomery v.

Commonwealth, 75 Va. App. 182, 189 (2022).

       Additionally, a jury verdict will not be set aside on appeal unless “plainly wrong or

without evidence to support it.” Bitar, 272 Va. at 137. A trial court “must accord the jury

verdict the utmost deference.” 21st Century Sys., Inc. v. Perot Sys. Gov’t Servs., Inc., 284 Va.

32, 41 (2012). It “may not substitute its conclusion for that of the jury merely because [it]

disagrees with the result.” Id. at 42. The United States Supreme Court has detailed the historical

purpose of our deference to jury verdicts:

                       The jury is a central foundation of our justice system and
               our democracy. Whatever its imperfections in a particular case,
               the jury is a necessary check on governmental power. The jury,
               over the centuries, has been an inspired, trusted, and effective
               instrument for resolving factual disputes and determining ultimate
               questions of guilt or innocence in criminal cases. Over the long
               course its judgments find acceptance in the community, an
               acceptance essential to respect for the rule of law. The jury is a
               tangible implementation of the principle that the law comes from
               the people.

                      In the era of our Nation’s founding, the right to a jury trial
               already had existed and evolved for centuries, through and
               alongside the common law. The jury was considered a
               fundamental safeguard of individual liberty.

                                               - 15 -
Pena-Rodriguez v. Colorado, 580 U.S. 206, 210 (2017). Jury verdicts approved by the trial court

are “the most favored position known to the law.” Bitar, 272 Va. at 137. We view the evidence

“in the light most favorable” to prevailing litigants, and approved jury verdicts will not be set

aside unless “plainly wrong or without evidence to support it.” Id.

       The Supreme Court of Virginia is equally deferential to jury damage awards. “There is

no fixed standard for measuring compensatory damages, and the amount of the award is largely a

matter of [jury] discretion . . . based on the facts and circumstances of each” case. Gazette, Inc.

v. Harris, 229 Va. 1, 41 (1985). Punitive damages are subject to “the jury’s discretion because

there is no set standard for determining the amount of punitive damages.” Coalson v. Canchola,

287 Va. 242, 249 (2014). Unless the award “is so excessive as to shock the conscience . . . or to

create the impression that the jury was influenced by passion or prejudice, a verdict approved by

the trial court will not be disturbed on appeal.” Gazette, 229 Va. at 41; Coalson, 287 Va. at 249.7

                               b. Scarabelli’s Assignments of Error

       Scarabelli argues that MCVAP’s counterclaim sounds in contract and is precluded by the

source of duty rule, voluntary payment doctrine, Virginia Wage Claim Act, and “Gasque”

doctrine. He claims that the contractual nature of MCVAP’s counterclaim is shown by the

damages, as MCVAP sought only the compensatory value of Scarabelli’s employment contract.

MCVAP counters that its fraudulent inducement claim sounds in tort. Because the damages

sought by MCVAP were appropriate in tort and the record supports the jury’s verdict,

Scarabelli’s arguments fail.

       7
        For example, in personal injury cases, damages are inadequate if the jury awards “the
exact amount of [the] claimed medical and special damages.” Jenkins v. Pyles, 269 Va. 383, 390
(2005).
                                             - 16 -
             i. The source of duty rule does not bar MCVAP’s counterclaim, as the
                counterclaim sounds in tort.

       Under the source of duty rule, a violated duty arising from contract sounds in contract,

but a violated duty arising “irrespective of a contract” sounds in tort. S. Wallace Edwards and

Sons, Inc. v. Selective Way Ins. Co., 2019 WL 6041123, at *2 (Va. Nov. 14, 2019) (quoting

Richmond Metro. Auth. v. McDevitt St. Bovis, Inc., 256 Va. 553, 558 (1998)). The source of

duty rule “has no application to a claim of fraudulent inducement of a contract,” id., as such

claims “logically preexist before the contract [was] allegedly induced and thus stand as a viable

tort claim,” Tingler, 298 Va. at 82 n.11.

       The five elements of fraud in the inducement are: (1) “false representation,” (2) “of a

material fact,” (3) which induces the contract, (4) “on which the [other party] had a right to rely,”

Abi-Najm v. Concord Condo., LLC, 280 Va. 350, 362 (2010), and (5) results in damages, State

Farm Mut. Auto. Ins. Co. v. Remley, 270 Va. 209, 218 (2005). On appeal, Scarabelli challenges

only the fifth element—the damages alleged by MCVAP. He claims that the damages sought are

compensatory, thereby converting its tortious fraudulent inducement action into a contractual

claim. Scarabelli’s argument fails because the damages sought against Scarabelli are actual

damages for his material fraudulent misrepresentations that induced MCVAP to contract.

       Generally, “damages for breach of contracts are limited to the pecuniary loss sustained.”

Dunn Const. Co. v. Cloney, 278 Va. 260, 266 (2009) (quoting Kamlar Corp. v. Haley, 224 Va.

699, 705 (1983)). Contract damages “are subject to the overriding principle of compensation.

They are within the contemplation and control of the parties in framing their agreement . . . [and]

are limited to those losses which are reasonably foreseeable when the contract is made.”

Kamlar, 224 Va. at 706.

       Meanwhile, tort damages are intended to compensate a “plaintiff for all losses suffered by

. . . the defendant’s breach of some duty imposed by law to protect the broad interests of social
                                               - 17 -
policy. To further protect those interests, punitive damages may be awarded . . . to punish the

wrongdoer and to deter similar conduct.” Id. In a tortious fraudulent inducement action, the

actual damages include, at the very least, a portion of the contract’s value. Specifically,

recipients of fraudulent misrepresentation may recover: “the pecuniary loss to him of which the

misrepresentation is a legal cause, including (a) the difference between the value of what he has

received . . . and its purchase price . . . and (b) pecuniary loss suffered otherwise as a

consequence of the recipient’s reliance upon the misrepresentation.” Restatement (Second) of

Torts § 549 (1977) (emphasis added).

         Scarabelli overlooks that contract and tort damages may, and often do, overlap. See id.;

Dunn Const. Co., 278 Va. at 266-67 (citing Foreign Mission Bd. v. Wade, 242 Va. 234, 241

(1991)); see generally Kamlar, 224 Va. 699. Although we do not award punitive, non-economic

damages in pure contract actions, the inverse—awarding compensatory damages in tort

actions—is not precluded. This is because contract damages are limited to economic damages,

and tort actions often include such damages. Indeed, fraudulent misrepresentation specifically

allows defendants to receive their economic losses. See Restatement (Second) of Torts § 549,

supra.

         Here, MCVAP asked for—and received—damages amounting to five months of

Scarabelli’s salary. Scarabelli’s contract ran from June 2017 to June 2018, and he was placed on

paid leave at the end of January 2018. MCVAP is entitled to recover its economic loss for

Scarabelli’s fraudulent inducement, including the difference between what MCVAP received and

what it paid, as well as any other loss “suffered otherwise as a consequence of” their reliance on

his misrepresentation. See id. MCVAP received seven months from Scarabelli before he was

placed on paid leave. As such, the difference between what MCVAP received and Scarabelli’s

contract value is exactly five months of Scarabelli’s salary.

                                                - 18 -
       The jury then awarded seven months of Scarabelli’s salary to MCVAP as punitive

damages. Again, punitive damages are intended to punish the wrongdoer and deter future

misconduct, Kamlar, 224 Va. at 706, and we give jury verdicts and jury damage awards “the

utmost deference,” 21st Century Sys., 284 Va. at 41. Scarabelli cries foul because these damages

made him an “involuntary volunteer.” Yet, this appears to be precisely what the jury intended—

one year’s pay to deter Scarabelli and others from lying on employment applications, especially

those focused on treating vulnerable patients. Finally, Code § 8.01-38.1 limits recovery on

punitive damages to $350,000. The jury’s punitive damages award is well-within that limit.

       The jury’s damage award to MCVAP is consistent with our precedent and well supported

by the evidence. Scarabelli does not argue that MCVAP improperly stated a claim for tortious

fraudulent inducement to contract, and the record supports this verdict. We hold that the jury’s

damage award sounded in tort and the source of duty rule does not apply.

        ii. The voluntary payment doctrine does not bar the counterclaim, as it sounds in
            tort and the voluntary payment doctrine does not apply to fraud.8

       Under the voluntary payment doctrine, “absent a showing of fraud or other misconduct,”

claimants cannot “demand that a court return money” that they “voluntarily paid to another.”

Sheehy v. Williams, 299 Va. 274, 278 (2020). In other words, “if one voluntarily makes a

payment which the law would not compel him to make, he cannot afterwards assign his ignorance

of the law as a reason why the state should furnish him with legal remedies to recover it.” Id. at

278-79. Additionally, the party paying the “illegal demand” must do so “with a full knowledge

of all the facts which render such demand illegal.” D.R. Horton, Inc. v. Bd. of Supervisors for

Cnty. of Warren, 285 Va. 467, 472 (2013). The voluntary payment doctrine does not apply to

fraud. See Sheehy, 299 Va. at 278. We have concluded that Defendants properly pleaded, and

       8
         We incorporate our above finding that MCVAP’s claims sounded in tort, not contract,
in the remainder of our discussion.
                                             - 19 -
proved, a claim for tortious fraudulent inducement. Thus, the voluntary payment doctrine does

not apply.

             iii. The Wage Payment Act does not bar the counterclaim, as Scarabelli was
                  properly paid and the Act does not protect employees from their own fraud.

       The Virginia Wage Payment Act governs when and how employers must pay their

employees and how wages may be withheld or forfeited. See Code § 40.1-29. Employers who

fail “to make payment of wages . . . shall be liable for the payment of all wages due.” Code

§ 40.1-29(G). The purpose of this statute is to protect employees from bad acting employers.

The purpose of this statute is not to ensure that employees always receive wages, even if they

commit fraud. See, e.g., Code § 40.1-29(E) (An employer who “refuses to pay wages [is guilty

of a crime] . . . unless the failure to pay was because of a bona fide dispute between the employer

and its employee” (emphasis added)).

       This statute does not apply here. Defendants paid Scarabelli his full salary and did not

withhold wages. A jury subsequently found Scarabelli liable for the value of five months of his

salary, due to his fraudulent inducement, and it found Scarabelli separately liable for the value of

seven months of his salary, as punishment for his actions. Although Scarabelli argues that such

punitive damages are contrary to Virginia law and public policy, this award comports with Code

§ 8.01-38.1. Scarabelli’s wage argument fails.

        iv. The doctrine precluding punitive damages in contract actions does not apply
            to the counterclaim, as it sounds in tort.

       Generally, “tort cases require[] an award of actual damages as a prerequisite to an award

of punitive damages.” Newspaper Pub. Corp. v. Burke, 216 Va. 800, 805 (1976). Additionally,

“[p]unitive damages are unavailable in suits purely ex contractu, and can be awarded only where

an independent, wilful tort is alleged and proved.” Gasque, 227 Va. at 159. In contract cases

where an independent and willful tort is proved, “an award of compensatory damages . . . is

                                                - 20 -
[generally] an indispensable predicate for an award of punitive damages.” Id. Scarabelli argues

that the punitive damages award depends on an invalid compensatory award. Because we find

that the jury’s award was a proper actual damages award, this argument fails.

        c. Furthermore, the trial court should be affirmed, as approved jury verdicts and
           damage awards are given the utmost deference.

       As stated above, jury verdicts and jury damage awards enjoy “the utmost deference.”

21st Century Sys., 284 Va. at 41. Approved jury verdicts are “the most favored position known

to the law.” Bitar, 272 Va. at 137. We view the evidence and all reasonable inferences “in the

light most favorable” to prevailing litigants—here, MCVAP. And we will not set aside a jury’s

damage award unless it is plainly wrong and “so excessive as to shock the conscience.” Gazette,

229 Va. at 41; Coalson, 287 Va. at 249.

       Scarabelli seeks to peer inside the jury’s black box—ignoring the fact that the jury was

polled and reaffirmed its unanimity—and scramble the results until he is satisfied. The record

supports the jury’s verdict. We decline to rewrite the results.

                                          CONCLUSION

       For the above reasons, we find that MCVAP’s counterclaim sounded in tort and that the

record supports the jury’s verdict. Thus, we affirm the jury’s verdict finding no defamation by

the named individuals. We also affirm the trial court’s denial of Call’s motion for sanctions.

But we reverse the trial court’s denial of Nestler’s motion for sanctions against both Scarabelli

and his attorney, Harris D. Butler, III, and we remand for an entry of an order consistent with this

decision after a hearing on the appropriate sanctions due.

                                                  Affirmed in part, reversed and remanded in part.

                                               - 21 -