Opinion
Case No. 07-10738-RGM, Adv. Proc. No. 07-01080-RGM.
September 12, 2007
MEMORANDUM OPINION
THIS CASE is before the court on defendant's motion to dismiss for failure to state a claim upon which relief can be granted (Docket Entry 6). In considering a motion to dismiss, this court must accept the allegations of plaintiff's complaint as true and view them in the light most favorable to plaintiff. See Ridpath v. Bd. of Governors Marshall Univ., 447 F.3d 292, 309 (4th Cir. 2006).
First, Defendant asserts that plaintiff seeks recovery based on a guarantee allegedly made by defendant, which the Virginia statute of frauds requires to be in writing to be enforceable. See Va. Code § 11-2(4). Plaintiff does not allege a guarantee but rather alleges that it lent money to defendant as primary obligor. See Compl. ¶¶ 6-8 (e.g., "Plaintiff agreed to loan the Defendant and Mancuso money . . ."). Accordingly, Va. Code § 11-2(4) would not apply.
Defendant argues in the alternative that plaintiff made an extension of credit in the aggregate amount of $25,000 or more, recovery of which requires a writing under Va. Code § 11-2(9). A threshold issue is whether the statute applies in the manner suggested by defendant. The language of the statute bars claims based on "any agreement or promise to lend money or extend credit in an aggregate amount of $25,00 or more." Va. Code § 11-2(9) (emphasis added). This language would appear to provides a defense only to lenders who have made an unwritten promise to extend credit of $25,000 or more. Its language does not appear to provide a defense to debtors who have borrowed $25,000 or more under an unwritten agreement. See Net Connection v. GWBEH, LLC, 67 Va. Cir. 150 (2005) ("As interpreted, the Statute applies only to agreements to lend money, not agreements where money has already been extended.") (citing Charles E. Brauer Co. v. NationsBank, 251 Va. 28, 466 S.E.2d 382 (1996)). In this case, the complaint alleges that plaintiff has already loaned the money to defendant, making the statute of frauds inapplicable. See Compl. ¶ 8.
In addition, on the facts pleaded by plaintiff, "Debtor and Mancuso agreed to repay the loans with interest of [$]5,000.00, when the property sold." Compl. ¶ 7. Under the standard for reviewing a motion to dismiss, plaintiff's complaint and the cancelled checks attached thereto support the theory that plaintiff made multiple loans to defendant, none of which was $25,000 or more. As such, Va. Code § 11-2(9) would not apply.
The motion to dismiss will be denied.