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Virginia Supreme Court Reverses Damages Award For Violation Of Nondisparagement Clause

Published by on March 7, 2011

The Virginia Supreme Court has reversed a jury verdict in favor of a individual against his former employer for violation of a nondisparagement clause in a separation agreement.  Alan Nogiec, a former director of the Parks and Recreation Department of Isle of Wight County, sued the County for breach of contract and its Assistant Administrator […]

The Virginia Supreme Court has reversed a jury verdict in favor of a individual against his former employer for violation of a nondisparagement clause in a separation agreement.  Alan Nogiec, a former director of the Parks and Recreation Department of Isle of Wight County, sued the County for breach of contract and its Assistant Administrator for defamation.  A jury found for Nogiec on both claims.  In Isle of Wight County v. Nogiec, Record No. 091693, and Small v. Nogiec, Record No. 091731, the Supreme Court of Virginia granted review to consider two questions:  first, whether the evidence on damages was sufficient to support the jury’s verdict on the breach of contract claim, and second, whether the statements giving rise to the defamation claim were absolutely privileged because they were made during a report to a subordinate legislative body.  More after the break.

Nogiec, after being placed on leave, retired in March 2007.  Upon his retirement, Nogiec and the County entered into a severance agreement that provided, among other things, that the parties “agree to refrain from making disparaging comments or statements, whether written or oral, about the other or any member of the County’s Board of Supervisors, administrators or employees.”

On May 24, 2007, County Assistant Administrator Patrick Small gave a report at a televised board meeting about the efforts to repair damage from an October 2006 flood (prior to Nogiec’s retirement).  In the board meeting, Small, in response to a Board question, said that Nogiec had been advised in memos going back for ten years that the museum could and likely would flood and, in fact, some of the memos mentions the same events that ultimately led to the flood.  Further, Small stated that the information had been “suppressed” from county administrators and that Nogiec’s [in]action “borders on negligence.”  The local paper ran a front page story on Small’s report in the board meeting containing Small’s statements to the Board.

In March 2008, Nogiec sued the County for breach of contract and Small for defamation.  It was alleged that the statement “the information had been suppressed” and that “it borders on negligence in my opinion” were “malicious and per se defamatory, slanderous and libelous.”  It was also alleged that the statement violated the severance agreement’s non-disparagement clause.  During trail, at the end of Nogiec’s case in chief, Small and the County moved to strike the evidence on the grounds that Nogiec had failed to introduce evidence of any damages he suffered as a result of the breach, and that Small’s alleged defamatory statements were absolutely privileged because that were made during a report to a legislative body.  The motions were denied by the circuit court and Defendants presented their case.  The jury returned a verdict in favor of Nogiec, awarding him $45,000 in compensatory damages on the breach of contract claim and $50,000 in compensatory damages and $100,000 in punitive damages on the defamation claim.  The County and Small again renewed their motion to strike and moved to set aside the verdict, which were again denied. 

On appeal the County asserted that the circuit court erred in denying its motion to strike and set aside the verdict because Nogiec failed to prove damages — an essential element of his breach of contract claim.  The plaintiff has the burden of proving with reasonably certainty the amount of damages and cause from which they resulted.  Damages based on uncertainties, contingencies or speculation cannot be recovered.  Failure to establish damages with reasonable certainty warrants dismissal of a breach of contract claim. 

Nogiec’s evidence consisted solely of his own testimony.  The Court found that Nogiec’s evidence on the costs of his decision to retire early and enter the severance agreement was not relevant to the alleged breach claim and could not support a jury verdict.  The Court also found that the evidence presented regarding Nogiec’s embarrassment and humiliation did not support the jury verdict.  Breach of contract damages, as a general rule, are limited to pecuniary losses sustained.  Further, absent some tort claim, damages for humiliation or injury to feelings are not recoverable for a breach of contract.  Nogiec claimed that humiliation and embarrassment should be considering in determining the amount of damages recoverable under the County’s breach because those were the very type of injuries the severance agreement was meant to guard against with the inclusion of the non-disparagement clause.  The Court did not find Nogiec’s argument persuasive and declined to “carve out an exception to the general rule that tort damages are not recoverable for breach of contract.”  Finally, Nogiec’s testimony regarding his lost job opportunities as a result of the breach, while relevant, did not provide sufficient factual evidence regarding the jobs he applied for and allegedly lost as a result of the breach.   Without evidence on the jobs allegedly lost, such as the salary, there was no way for the jury to make an intelligent and probable estimate of the damages he sustained as a result of the County’s breach and it cannot support the jury’s verdict.  Estimates of damages based entirely upon assumptions are too remote and speculative.

The court therefore agreed with the County that Nogiec failed to meet his burden of proving with reasonable certainty the damages that resulted from its breach and found that the circuit court erred in denying the County’s motion to strike and set aside the verdict on that claim. 

In addition, Small, on appeal, claimed that the circuit court erred in denying his motions to strike and set aside the verdict, since the statements giving rise to the defamation claim were absolutely privileged because they were made while he was a witness in a legislative proceeding.  Nogiec argued that small waived his absolute privilege by failing to plead it as an affirmative defense.  Nogiec also asserted that the absolute privilege did not apply because the statements were unrelated t the issue before the Board, i.e. the status of the museum repairs.

The court stated that because absolute privilege is an affirmative defense, Small bore the burden of establishing that the statements giving rise to Nogiec’s defamation claims were absolutely privileged.  The court found that because the Board was not acting in a legislative capacity when Small gave his report, his statements were not absolutely privileged.  Instead, Small’s statements were entitled to a qualified privilege because Small, in his administrative capacity, had a duty to report the status of the museum repairs to the Board.  The court found that the circuit court properly submitted the issue of whether the statements were made with malice because Nogiec was only able to prove liability if the statements were made with malice.  The Court therefore affirmed the judgment against Small.

The opinion can be read here.

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