Court Opinion

ID: 1010489
Source: CourtListenerOpinion
Date Created: 2013-07-04 20:12:27.322376+00
Date Added: 2024-06-11T15:27:07.625727
License: Public Domain

UNPUBLISHED

UNITED STATES COURT OF APPEALS
               FOR THE FOURTH CIRCUIT

WANDA W. KING,                          
                 Plaintiff-Appellant,
                 v.
                                                 No. 02-1325
DONNKENNY, INCORPORATED, a
Delaware Corporation,
               Defendant-Appellee.
                                        
           Appeal from the United States District Court
        for the Western District of Virginia, at Abingdon.
             Glen M. Williams, Senior District Judge.
                         (CA-98-58-1)

                      Argued: February 28, 2003

                        Decided: May 6, 2003

    Before MICHAEL, TRAXLER, and KING, Circuit Judges.

Reversed and remanded by unpublished per curiam opinion.

                             COUNSEL

ARGUED: Mary Lynn Tate, THE TATE LAW FIRM, Abingdon,
Virginia, for Appellant. William Beverly Poff, WOODS, ROGERS &
HAZLEGROVE, P.L.C., Roanoke, Virginia, for Appellee. ON
BRIEF: Frank K. Friedman, R. Lucas Hobbs, WOODS, ROGERS &
HAZLEGROVE, P.L.C., Roanoke, Virginia; Harvey B. Cohen, John
C. Pasierb, COHEN GETTINGS, P.C., Arlington, Virginia, for
Appellee.
2                      KING v. DONNKENNY, INC.
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).

                              OPINION

PER CURIAM:

   Wanda King appeals the district court’s grant of summary judg-
ment to her former employer, Donnkenny, Inc. ("Donnkenny"), on her
claims for wrongful termination, intentional infliction of emotional
distress, and negligent infliction of emotional distress. For the reasons
set forth below, we reverse and remand.

                                   I.

   King alleged that she was terminated from her employment as
Donnkenny’s accounting manager in retaliation for her refusal to par-
ticipate in a securities fraud scheme perpetrated by several senior
Donnkenny employees. Donnkenny moved to dismiss King’s com-
plaint for failure to state a claim, based on a release King signed at
the end of her employment. The release stated in part that, in
exchange for a severance package, King would maintain the confiden-
tiality of Donnkenny’s financial information and forgo all claims
related to her employment.

   King’s original complaint, filed in April 1998, claimed she exe-
cuted the release under duress. The court found this claim defective,
but granted her permission to file an amended pleading, wherein she
alleged wrongful termination, intentional infliction of emotional dis-
tress, and negligent infliction of emotional distress. Her amended
complaint survived a motion to dismiss, whereupon the parties
engaged in discovery, and Donnkenny filed a motion for summary
judgment. Donnkenny’s motion was referred to a magistrate judge,
who recommended dismissal of all claims on the grounds that King
had consciously entered into the release for significant consideration
and failed to invalidate the release by presenting legally adequate
proof of duress. The magistrate judge also found that King’s wrongful
termination claim did not fit within the exception to Virginia’s
                        KING v. DONNKENNY, INC.                         3
employment-at-will doctrine and that King had not stated viable
claims for intentional or negligent infliction of emotional distress. The
magistrate judge therefore recommended granting Donnkenny’s
motion.

   In response to King’s objections to the report and recommendation,
the district court took additional briefing and argument and then
granted summary judgment to Donnkenny. Rather than basing its
decision on the magistrate judge’s recommendations, the court held
that King had ratified the release by "accepting the severance package
and benefits and never attempting to return them." J.A. 770. Accord-
ing to the court, this was "dispositive of all claims involved in this
suit." Id. King appealed.

                                   II.

   We review the district court’s award of summary judgment de
novo, see M&M Med. Supplies & Serv., Inc. v. Pleasant Valley Hosp.,
981 F.2d 160, 163 (4th Cir. 1992), taking the facts and inferences in
the light most favorable to the plaintiff, see Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 255 (1986).

   The district court ruled that King had ratified the release by accept-
ing the severance package and benefits from Donnkenny and never
attempting to return them. King challenges this holding, arguing that
the release she signed was void because it had the purpose of further-
ing Donnkenny’s criminal conspiracy and so could not be ratified by
her subsequent acts. Donnkenny contends that the release was a stan-
dard one, perfectly valid and not sought out for an illegal purpose.

   Under Virginia law, it is well settled that a contract based on illegal
consideration is void and unenforceable. See Kennedy v. Annandale
Boys Club, Inc., 272 S.E.2d 38, 39 (Va. 1980) (per curiam) ("A void
contract is a complete nullity, one that has no legal force or binding
effect."); Colbert v. Ashland Construction Co., 11 S.E.2d 612, 616
(Va. 1940) (stating that "[w]hen the law prohibits a thing, it is unlaw-
ful to do it, and the courts should not lend their aid to the enforcement
of prohibited contracts").
4                      KING v. DONNKENNY, INC.
   King presents evidence that the motivation for the release in this
case was Donnkenny’s desire to continue its securities fraud scheme
and that Donnkenny needed to remove King from her position
because she did not want to participate. Viewed in the light most
favorable to King, the evidence also could prove that Donnkenny
needed to prevent her from revealing the scheme to anyone else.
Thus, the release could reasonably be construed as furthering a fraud-
ulent scheme. Since the purpose for the release was the furtherance
of illegal activity, she argues, it was a nullity. If this were to be
proven to be a purpose of the release, then the release would indeed
be void.

   For its part, the district court did not address King’s voidness argu-
ment, but rather determined she had ratified the release and thus dis-
posed of all her claims on this basis. Although a voidable contract can
be ratified, see, e.g., Princess Anne Hills Civic League, Inc. v. Susan
Constant Real Estate Trust, 413 S.E.2d 599, 604 (Va. 1992), a void
contract cannot, see Kennedy, 272 S.E.2d at 39 (noting that a void
contract "cannot in any manner have life breathed into it"). The dis-
trict court therefore erred in deciding the ratification issue without
first addressing the question of whether the release was void. Since
we have determined that an issue of fact exists as to whether the
release was void, the entry of summary judgment was in error. We
therefore reverse the district court and remand for further consider-
ation of King’s claims in accordance with this opinion.

                                       REVERSED AND REMANDED