The case is Bala Jain, LLC v. Amit Jain. The plaintiff, Bala Jain, had sued Amit and Monika Jain for statutory business conspiracy as well as other claims. The jury awarded $5,429,608.77 in damages against each of the defendants, without any consideration of tripling that amount. The successful plaintiff then asked the court to triple that amount to over $16M, which it claimed was required by the terms of the statute. The trial court ultimately agreed and tripled the damages, holding it lacked discretion to avoid or reduce them.

The court first looked to prior court decisions to see how the statute had been interpreted. It found two Virginia Supreme Court opinions in which the question had come up, but neither one actually answered the question head-on. It then pulled up another circuit court case–Maximus, Inc. v. Lockheed Info. Mgmt. Sys. Co., 47 Va. Cir. 193 (Richmond Oct. 7, 1998)–in which the trial court judge found that the plain language of the statute required treble damages and did not just permit them.

The Fairfax court agreed with this approach. It noted that there are several other statutes in the Virginia Code dealing with treble damages. Some clearly mandate treble damages whereas other statutes clearly only permit such awards. Therefore, the court concluded, the Virginia legislature is aware of the difference and knows how to write laws that achieve their objective. With the business-conspiracy statute, the legislature could have easily inserted language to give the trial court mere discretion to award treble damages. Instead, the statute says that a plaintiff “may sue therefor and recover three-fold damages.”

The defendants argued that the permissive word “may” in that clause suggests that treble damages are discretionary. Taking the plain-language approach, the court disagreed. The “object of the sentence in the statute is the injured party, not a court,” it wrote. There, it’s the plaintiff who “may” opt to sue. It doesn’t say that a court “may” triple the damages. For that reason, it held that “treble damages are mandatory” and, based on that one simple ruling, promptly added over $10M to the plaintiff’s damages award.

The opinion lays out the following factual background. The Terrace View Subdivision in Forest, Virginia, was developed in 2000. When the subdivision was created, the developer recorded a Declaration of Protective Covenants that authorized (but did not require) the creation of a property owners association. The Declaration gave the developers the right to transfer common areas to Terrace View POA, and stated that the association “shall have the right to establish and collect assessments,” with lot owners deemed to have “agreed to pay same when and as due” by purchasing property in the subdivision.

The developer incorporated Terrace View POA in 2005, but the association remained inactive for nearly a decade. It wasn’t until 2014 that the corporation registered with Virginia’s Common Interest Community Board. Terrace View also adopted bylaws stating that its board of directors had a duty to “fix the amount of the annual assessment against each Lot” and to “cause the Common Property to be maintained.”

In 2022, Terrace View imposed an “Association Fee” on Shekar and Barbara Jannah, who owned multiple lots in the subdivision. The Jannahs refused to pay and filed a declaratory judgment action, arguing that Terrace View was not a valid POA under Virginia law and had no authority to levy assessments. They also sought a declaration that Terrace View could not enforce any restrictive covenants against them. This turned out to be a winning strategy.

The trial court entered summary judgment in the Jannahs’ favor, and the Court of Appeals affirmed. Here’s why:

1. Terrace View Isn’t a Valid POA

Under Virginia law, to qualify as a property owners association under the Virginia Property Owners Association Act, an entity must satisfy a two-prong test established by the Virginia Supreme Court. The association must have both (1) the power to collect assessments; and (2) a corresponding duty to maintain common areas. (See Dogwood Valley Citizens Association v. Winkleman, 267 Va. 7, 14 (2004)). Both requirements must be “expressly stated in a recorded instrument.” The court emphasized that the duty to maintain common areas must be “imposed” on the association. Voluntary assumption of maintenance responsibilities is insufficient. (See Anderson v. Lake Arrowhead Civic Association, 253 Va. 264, 272 (1997)). A duty is only truly “imposed” if it cannot be eliminated simply by amending the association’s bylaws.

Terrace View’s Declaration failed this test. While it gave the association the right to collect assessments, it did not impose any duty to maintain common areas. That duty appeared only in Terrace View’s bylaws, which could be amended at any time by its board of directors. Because the maintenance obligation could be eliminated through a simple bylaw amendment, it wasn’t truly “imposed” within the meaning of the statute.

The court rejected Terrace View’s argument that a 2024 amendment to the POAA had relaxed these requirements. Tracing the legislative history, the court found that the amendment merely clarified that valid POAs could use assessment funds to pay for legal obligations and contractual duties. It did nothing to change what makes an entity a valid POA in the first place. In other words, the amendment addressed what existing POAs can spend money on, not what an organization needs to qualify as a POA.

2. The Declaration’s Assessment Provisions Were Not Enforceable

Terrace View presented an alternative argument: even if Terrace View wasn’t a valid POA, it could still collect assessments based on contract principles. After all, the Declaration stated that lot owners “agreed to pay” assessments “when and as due.” This argument might work in appropriate circumstances, but here, the court rejected it because the assessment provision was too indefinite to constitute an enforceable contractual provision.

Under Virginia law, a contract must be “definite and certain as to its terms and requirements” and must “spell out the essential commitments and agreements.” The court looked to decisions from other jurisdictions and identified a two-part definiteness test for assessment covenants: the covenant must contain ascertainable standards for both (1) the amount of the assessment and (2) the purpose for which assessments will be used.

The Declaration here failed both prongs. It did not specify any amount that could be assessed. It simply said the association would have “the right to establish” assessments, leaving the amount entirely to the association’s discretion. The Declaration also said nothing about what assessment revenues could be used for. Its language shed no light on where or how assessment revenue would be funneled. As the court noted, “declaring that someone ‘shall have the right’ to do something does little to inform contracting parties how they will exercise that right.”

Without standards governing either the amount or purpose of assessments, a reasonable purchaser could not ascertain from the Declaration what financial obligations came with buying a lot in the subdivision. The assessment provision was therefore held void for indefiniteness.

In the case of Appian Corp. v. Pegasystems, Inc., a jury returned a verdict exceeding $2 billion after finding that a competitor had misappropriated trade secrets through what the record described as sustained corporate espionage. That massive judgment did not survive appellate review. Although the evidence was deemed sufficient to support the jury’s finding of trade secret misappropriation, the trial court had improperly instructed the jury that the defendant bore the burden of proving which portions of its profits were untainted by the misappropriation. That instruction reflected a widely accepted national approach to trade-secret damages. But it was held to be inconsistent with controlling Virginia law.

The case arose from a fierce competitive rivalry between Appian Corporation and Pegasystems, Inc., two enterprise software companies that sell “low-code” business process management platforms to large commercial and government customers. By the early 2010s, Appian had begun to surpass Pegasystems in influential industry rankings, a development that internal Pegasystems communications described as deeply destabilizing.

In 2012, Pegasystems’ competitive-intelligence group retained an outside consultant, Youyong Zou, who had authorized access to Appian’s software and confidential documentation through his employment with an Appian business partner. Pegasystems deliberately hired Zou as an external contractor and internally referred to him as a “spy,” taking steps to conceal his identity during presentations to Pegasystems engineers and executives. Over roughly two years, Zou downloaded internal Appian documents, created detailed tutorials demonstrating Appian’s software architecture, and briefed Pegasystems personnel on both Appian’s technical strengths and its nonpublic weaknesses.

At trial, Appian presented expert testimony that the information obtained through Zou went beyond publicly observable features and disclosed internal design choices, architectural tradeoffs, and performance limitations that Appian closely guarded. Appian’s experts identified several features introduced in later versions of Pegasystems’ platform that closely mirrored Appian’s internal implementations, as well as competitive sales strategies informed by confidential knowledge of Appian’s weaknesses. During the same period, the companies competed head-to-head hundreds of times.

Zou lost access to Appian’s systems in 2014, but evidence showed that Pegasystems employees later attempted to access Appian software through aliases and non-company credentials. The conduct came to light in 2020, after a former Pegasystems executive disclosed the scheme following his move to Appian. Appian then sued under the Virginia Uniform Trade Secrets Act. After a seven-week trial, the jury found misappropriation and awarded more than $2 billion in damages.

In proving damages at trial, Appian argued that if the jury determined that Pegasystems had sold tainted products, it became Pegasystems’ obligation to demonstrate that any portion of those sales should not be attributed to the misappropriation of trade secrets. This argument followed on a well-known formulation from the Restatement (Third) of Unfair Competition § 45 cmt. f, which says:

The plaintiff has the burden of establishing the defendant’s sales; the defendant has the burden of establishing any portion of the sales not attributable to the trade secret and any expenses to be deducted in determining net profits.

That rule appeals to many jurisdictions around the country for several reasons. First and foremost is that as a practical matter, the plaintiff is usually not in a position to trace exactly how the misappropriation of its trade secrets resulted in specific identifiable profits to the defendant. The defendant controls its own cost structures, profit allocations, and internal revenue segmentation. Requiring plaintiffs to disaggregate profits with precision is often impossible.

Additionally, damages under the Virginia Uniform Trade Secrets Act are governed by Va. Code § 59.1-338, which permits a plaintiff to recover damages on an unjust enrichment basis. Many courts view unjust enrichment as an equitable remedy that doesn’t require a tort-style damages calculation.

In Virginia, however, the Restatement is not binding legal authority. However appealing its logic may be, the settled common law in Virginia is that a plaintiff must prove the amount of its damages; the burden does not shift to the defendant, even if the defendant is in sole possession of the damages evidence. “A plaintiff bears the burden of proving both that he has been harmed by the defendant’s wrongful act and that the defendant’s wrongful act proximately caused the damages the plaintiff seeks to recover,” the court wrote.

The court noted that under Va. Code § 1-200, Virginia is bound to follow English common law unless modified by the legislature. The court found nothing in the Virginia Uniform Trade Secrets Act (or any other statute) that would shift the burden of proving damages to the defendant.

Also, while true that the defendant here was in sole possession of the data needed to prove damages with specificity, the VUTSA explicitly deals with this situation by providing for a fallback remedy of reasonable royalties. (See Va. Code § 59.1-338(A) (“If a complainant is unable to prove a greater amount of damages by other methods of measurement, the damages caused by misappropriation can be measured exclusively by imposition of liability for a reasonable royalty for a misappropriator’s unauthorized disclosure or use of a trade secret”)). In other words, the General Assembly was fully aware that trade secret damages might be difficult to prove, and they addressed the problem not by shifting the burden of proof, but by making royalties available as a remedy.

The court concluded that the trial court had given improper instructions to the jury regarding the burden of proof on damages, so the court affirmed the Court of Appeals’ decision to set the verdict aside and remand for a new trial.

Under Rule 3:8(a), defendants must file responsive pleadings within 21 days after service of process. Failure to do that results in default under Rule 3:19. Under Rule 3:19(b) provides that “[p]rior to the entry of judgment, for good cause shown the court may grant leave to a defendant who is in default to file a late responsive pleading.” (Emphasis added). The Virginia Supreme Court has found good cause to exist in circumstances involving (1) lack of prejudice to the opposing party; (2) good faith of the moving party; (3) promptness of the moving party in responding to the opposing party’s decision to progress with the case; (4) the existence of a meritorious claim or substantial defense; (5) the existence of legitimate extenuating circumstances, and (6) a justified belief that the suit has been abandoned or will be allowed to remain dormant on the docket. (See Westfall v. Westfall, 196 Va. 97, 103 (1954); Eagle Lodge, Inc. v. Hofmeyer, 193 Va. 864, 870 (1952); Worsham v. Nadon, 156 Va. 438, 443 (1931)). Ultimately, trial courts have discretion to rule as they see fit; this list of justifiable circumstances is not exhaustive or necessarily determinative, and the trial judge may decide to refuse leave to file late responsive pleadings even if good cause is shown. (See AME Fin. Corp. v. Kiritsis, 281 Va. 384, 392-393 (2011)).

In an opinion issued last month in the Fairfax County case of Carter Lumber of Virginia, Inc. v. Step 1 Enterprises, LLC, the court was presented with a motion by the defendant to allow it to file a late responsive pleading. Applying the above principles, the court denied the motion and declared the defendant in default. Why? In short, because the defendant just didn’t have a good reason for failing to file a responsive pleading within 21 days of service.

Carter Lumber sued Step 1 Enterprises for approximately $127,000 for allegedly unpaid construction materials and installation work. The complaint was served on Step 1’s registered agent in Virginia, which is a valid method of service on limited liability companies. Responsive pleadings were due on August 14, 2025. A couple of weeks after that deadline came and went without Step 1 filing an answer or other pleading, Carter Lumber moved for a default judgment and sent a copy to Step 1 by regular and certified mail. It wasn’t until October 9th–56 days after service of the complaint–that Step 1 filed anything with the court, when it moved for leave to file a late pleading.

The defendant’s main excuse for not responding to the complaint earlier was that “Step 1 [did] not recall” receiving the summons and complaint. Its counsel also argued that the plaintiff’s attorney should have alerted him to the default as a professional courtesy, but didn’t. The court did not find these excuses sufficient to demonstrate good cause within the meaning of Rule 3:19(b).

By arguing that it did not recall receiving the suit papers, all the defendant had really done was admit to inattentiveness and to having sloppy internal systems for handling legal documents. That’s not a sufficient explanation. It failed to explain why multiple notices went unanswered or whether there were any legitimate extenuating circumstances. Step 1 did not act promptly, either. Even after learning of the motion for default judgment, it delayed over a month before taking any action. The “professional courtesy” argument was no good, either, because professional courtesy expectations do not expand procedural obligations.

The court denied the motion for leave to file a late pleading and directed the entry of a default judgment. The opinion makes clear that courts will not excuse defaults without accountability. A meritorious defense and lack of prejudice are not substitutes for diligence. “Good cause” requires a coherent narrative explaining the failure, not just regret after the fact.

In Ressa Construction, Inc. v. Dillaman (Va. Ct. App. Sept. 30, 2025), the Virginia Court of Appeals affirmed a circuit court ruling that a construction agreement was an unenforceable “agreement to agree” despite the fact that an installment payment had been made and building plans had been submitted to the county. When a dispute arose between the homeowners and the construction company hired for a remodeling project, the plaintiffs were allowed to back out and recover their deposit on a theory of unjust enrichment. The court held the construction contract was unenforceable as no meeting of the minds was ever reached regarding the scope of the project. The failure of the contract meant that the law of unjust enrichment came into play.

The opinion outlines the following fact pattern. In 2021, homeowners Jason and Natasha Dillaman engaged Ressa Construction to renovate their home. The parties signed a document on April 30, 2021, which included a “lump sum price” of $398,667 and referenced two exhibits: Exhibit A (described as “forthcoming Owner/Contractor endorsed permit approved plans”) and Exhibit B (a detailed estimate based on preliminary drawings). Exhibit B was attached to the purported contract; crucially, Exhibit A was not. The Dillamans paid the first installment—nearly $40,000—at the time of signing.

Over the following months, the project evolved. After significant revisions to the plans, Fairfax County approved final permit drawings in March 2022. Ressa then revised the project price to $596,221, citing scope changes and material cost increases. The Dillamans, unwilling to proceed under the new price, withdrew from the project and sought return of their initial payment. Ressa refused to return their payment and accused them of breaching the parties’ contract. The Dillamans sued for unjust enrichment and conversion. Ressa filed a counterclaim for breach of contract and attorney fees.

The Fairfax County Circuit Court found that the April 30 document was an unenforceable “agreement to agree” (i.e., an agreement to negotiate a material term at some point in the future) rather than a binding contract. It reasoned that the agreement’s scope of work—undeniably a material term—was defined by reference to “Exhibit A,” which was not attached and did not even exist at the time of signing. Because the parties contemplated reaching a future agreement on scope, there was no meeting of the minds sufficient to form a binding agreement. The court dismissed Ressa’s counterclaim and entered judgment in the Dillamans’ favor on their unjust enrichment and conversion claims.

The Court of Appeals affirmed the trial court’s ruling in all respects. To be enforceable, an agreement must contain mutual assent on all material terms, expressed with sufficient certainty and completeness. (See Dean v. Morris, 287 Va. 531, 537 (2014)). Here, the contract language stated clearly that Exhibit A (along with Exhibit B) defined the scope of the project, and Exhibit A’s description as “forthcoming” and “Owner/Contractor endorsed” demonstrated the parties’ intent to finalize that component in the future. Without a meeting of the minds as to the scope of the project, the contract failed:

The contract in this case defined the scope of work by reference to an exhibit that did not yet exist and would need to be “endorsed” by the parties once it was created. Thus, the terms of the contract plainly show that the parties did not have a meeting of the minds on that material term.

Without an enforceable agreement, Ressa had no legal basis for retaining the Dillamans’ $40,000 payment, so the Court of Appeals upheld the trial court’s decision to award damages in that amount to the homeowners.

Note that unjust enrichment is not an available remedy when a binding contract exists between the parties. Unjust enrichment is considered a “quasi contract” remedy to prevent injustice when a benefit has been conferred on another party with an expectation of getting something in return despite the absence of a formal agreement. If the parties did form an enforceable agreement regarding the transaction at issue, then that agreement will control who gets what, not the doctrine of unjust enrichment. But if the parties attempt but fail to form a binding contract, and retention of a benefit would be inequitable, restitution may be ordered.

Truist Bank learned this when the Western District of Virginia refused to enforce a boilerplate arbitration clause in a contract with one of its customers. In Kiser v. Truist Financial Corporation, the court denied Truist’s motion to compel arbitration, concluding that even if an arbitration agreement existed, it was illusory and therefore unenforceable.

The plaintiffs, Tarah and Ronald Kiser, sued Truist, alleging that Truist forged their signatures on certain banking documents and inserted false information into various account-related forms. Truist moved to compel arbitration based on clauses found in various versions of its “Rules and Regulations for Deposit Accounts” that governed the plaintiffs’ banking relationships. The arbitration clause appeared in multiple iterations of the account agreement since 2006. Notably, these agreements gave Truist the unilateral right to amend the terms and conditions, including the arbitration provision, with or without notice to the Kisers. One agreement read, “Unless otherwise prohibited or required by applicable law or regulation, the Bank may change from time to time other provisions of these rules and regulations with or without notice.”

After concluding that the Kisers had agreed to the arbitration language, the court held that the clause was illusory and therefore unenforceable. The key factor was Truist’s “unfettered unilateral modification power”—the power to unilaterally amend the arbitration provision without providing advance notice to the account holders.

The court noted that Truist’s account agreements lacked clear limitations on its power to modify or terminate the arbitration agreement. While some versions required notice only if “required by law,” the agreements generally did not prohibit retroactive changes, nor did they require meaningful notice or consent from the customer. The court pointed out that if it was the customer who sought to invoke the arbitration clause and compel arbitration, Truist was free to unilaterally delete the clause if it no longer wished to arbitrate the particular dispute. In short, Truist had reserved the power to change the rules at any time, potentially even after a dispute had arisen.

This unilateral modification power rendered the arbitration clause illusory under Virginia contract law. The court reasoned that if one party can change the arbitration provision at will and without notice, there is no binding mutual obligation. A party cannot be compelled to arbitrate under an agreement that the other party is free to rewrite or discard.

“In essence,” the court wrote, “Truist never agreed to be bound by anything. Truist retained the ability to hold the Kisers to their promises while also reserving for itself a unilateral escape hatch to activate whenever it sees fit.”

Different states address the continuing-violation doctrine in different ways. There are three main approaches:

1. Some states hold that where a tort involves a continuing or repeated injury, the statute of limitations does not begin to run until the date of the last injury or when the tortious acts cease.
2. Most states (roughly 2/3 of them) hold that every repetition is a separate wrong subject to a new and separate limitation period for which a new lawsuit may be brought.
3. In Virginia, the doctrine is applied to bar claims, not save them. Virginia follows the minority rule that the cause of action accrues when a trespass or interference originates, even if the trespass is a continuing tort. “[W]hen the recurring injuries ‘in the normal course of things, will continue indefinitely, there can be but a single action therefor, and the entire damage suffered, both past and future, must be recovered in that action,’ and as a result, ‘the right to recover will be barred unless it is brought within the prescribed number of years from the time the cause of action accrued.’…In this scenario, the limitation period runs from the start of the continuous and indefinite injury not the end of it.” (See Forest Lakes Cmty. Ass’n v. United Land Corp. of Am., 293 Va. 113, 126-27 (2017)). An exception exists where there is an “undertaking” that requires a continuation of services. (See Harris v. K & K Ins. Agency, 249 Va. 157, 161 (1995)). In that event, the statute of limitations does not begin to run until the termination of the undertaking. The exception is very narrow, however, and usually only applies in the context of professional services such as those provided by physicians, attorneys, and accountants.

A continuous breach involves a permanent or indefinite injury that stems from a single wrongful act or policy. The limitations clock starts with the initial injury, and no further acts reset it. A recurring breach involves distinct, separate wrongful acts, each triggering a new cause of action and limitations period. (See Fluor Fed. Sols., LLC v. PAE Applied Techs., LLC, 728 F. App’x 200, 202 (4th Cir. 2018)).

In an opinion dated August 12, 2025, in the case of AV Automotive, L.L.C. v. Bavely, the Virginia Court of Appeals discussed these issues in depth, ultimately upholding the trial court’s decision to allow a jury to determine whether an alleged breach of fiduciary duty should be regarded as “continuous” (in which the claim would be time-barred) or “recurring” (in which case the claim would be timely).

AV Automotive had asserted a breach-of-fiduciary-duty claim against Donald Bavely, its former president, alleging he had engaged in self-dealing. Bavely filed a plea in bar raising a statute-of-limitations defense. (The statute of limitations for fiduciary breaches is two years–see Va. Code § 8.01-248). AV alleged that Bavely continued to pay himself excessive salary and fees well into the limitations period. It argued the limitations period had not expired because these fiduciary violations were recurring. Bavely’s position was that any misconduct he may have committed was part of a continuous breach that began years earlier, well outside the two-year window.

The trial court thought it would be appropriate to have a jury decide which party’s characterization of the conduct at issue was the right one. It scheduled the plea in bar for an evidentiary hearing (essentially a mini-trial) that lasted an entire week. The purpose of the hearing was to resolve whether the alleged fiduciary breaches were continuing (and therefore time-barred) or recurring (and potentially within the limitations window). The jury found that the breaches were continuous and thus untimely.

The Court of Appeals affirmed, finding that there was sufficient factual ambiguity to warrant submitting the matter to a jury. Evidence showed that Bavely had received a fixed salary since 2009, and that management fees were paid annually under a formula. Even if improper, the jury could reasonably conclude (and did apparently conclude) that this structure represented a single, continuous breach, as opposed to a series of discrete acts.

Kristopher Knepper, a former executive at The Lawson Companies (TLC), was hired in 2016 to serve as Director of Development and Acquisitions, later rising to Vice President. As part of his employment onboarding, Knepper signed a standalone “Restrictive Covenants Agreement” that prohibited him from engaging in low-income housing development work within broad geographic boundaries for two years after his departure. Separately, in 2020, Knepper became a partial owner of TLC’s affiliated holding company, TLC Holding, LLC, when he was granted Class B membership units. That ownership interest triggered a second set of restrictive covenants, this time embedded in the company’s Operating Agreement. These restrictions were functionally similar to those in the earlier agreement but extended indefinitely, applying as long as Knepper remained a member of the LLC.

In 2023, TLC terminated Knepper’s employment without cause. He retained his Class B Units and thus remained an inactive member of the LLC (but not an employee). Shortly thereafter, Knepper initiated a lawsuit seeking, among other relief, a declaration that both restrictive covenants were unenforceable. The court methodically applied Virginia’s three-part test and found both agreements lacking in several key respects.

1. Geographic Ambiguity and Overreach

The court began its analysis by criticizing the geographic scope of the non-compete provision in the Restrictive Covenants Agreement, which prohibited Knepper from engaging in competitive activity across “Hampton Roads, Virginia, Richmond, Virginia, or Charleston, South Carolina or any other metropolitan area in which [TLC] is engaged in business….” This scope was problematic in two respects. First, TLC had presented no evidence of any actual business activity in Charleston, South Carolina. Including it in the noncompete therefore violated the principle that geographic restrictions must be grounded in a demonstrable business interest. Second, the term “Hampton Roads” was undefined and inherently ambiguous, encompassing multiple cities with unclear boundaries. Courts in Virginia have routinely invalidated non-competes that impose restrictions in undefined or speculative locales.

2. Indefinite Duration Tied to Ownership

While the Restrictive Covenants Agreement included a two-year post-employment limitation, the restrictive covenant in the Operating Agreement had no fixed endpoint. Because Knepper remained a passive owner of Class B Units, TLC argued that the OA’s restrictions should continue to apply indefinitely, or at least until he sold or relinquished his interest. The court rejected this premise outright, holding that the absence of any durational limit for inactive, non-employee members rendered the provision unenforceable. As the court noted, such a restriction could theoretically bind a former employee for life, a result incompatible with the requirement that restraints on trade be narrowly drawn and time-bound.

3. Functional Overbreadth

Both sets of covenants also failed in their description of restricted activity. The earlier agreement prohibited Knepper from working on any project he had “pursued” on behalf of TLC, even if the company itself later chose not to pursue it. The court deemed this language overly broad and unduly harsh, as it would bar Knepper from working on entirely abandoned projects that TLC had no ongoing interest in. Similarly, a clause prohibiting him from soliciting any TLC employee “in any capacity”—even for roles unrelated to the company’s business—was found to be excessive. The court gave the colorful example of hiring a former TLC employee as a personal dog walker to illustrate the absurd breadth of the provision.

Knepper serves as a cautionary tale for lawyers drafting restrictive covenants, particularly in dual-capacity relationships involving both employment and ownership. Drafters must avoid the temptation to overprotect by casting wide nets; instead, enforceable covenants must be narrowly tailored to match the employer’s specific business interests. Anything less invites judicial scrutiny and, as in Knepper, outright invalidation.

This is precisely the kind of commercial uncertainty that the Restatement (Second) of Contracts § 251 and Uniform Commercial Code § 2-609 aim to mitigate. (See Virginia Code § 8.2-609). These doctrines create a mechanism for managing contractual insecurity without requiring parties to wait helplessly for either full breach or explicit repudiation. Under both frameworks, when one party has “reasonable grounds for insecurity” regarding the other’s performance, it may demand “adequate assurance” that the other will fulfill its obligations. This is not a demand to terminate, but a demand for clarity. If the other party fails to provide such assurance within a “reasonable time”—defined by the U.C.C. as not to exceed thirty days—that failure itself may be treated as a repudiation. This shifts the analysis from one focused solely on the subjective intentions of the potentially breaching party, to one that also accounts for the objective commercial realities faced by the insecure party. It empowers the party to take protective measures—up to and including suspending performance—without having to meet the virtually unreachable threshold of proving an unequivocal anticipatory breach at common law.

Trouble is, the U.C.C. only applies to transactions in goods, and the Restatement is not binding authority in Virginia. On May 29, 2025, the Supreme Court of Virginia issued an opinion in Under Wild Skies, Inc. v. National Rifle Association of America. At issue was whether Virginia recognizes the right to demand adequate assurance of performance in contracts not governed by the Uniform Commercial Code. The Court answered that question in the negative.

Here’s what happened, according to the opinion. Under Wild Skies, Inc. (“UWS”), a television production company, had a decades-long relationship with the NRA, producing a hunting-themed program of the same name. In 2018, the parties entered into long-term sponsorship and advertising agreements running through 2025. In mid-2019, amidst a broader internal review, the NRA sent UWS a request for detailed viewership and marketing data. UWS balked, asserting the request was neither contractually required nor routine. Through counsel, UWS warned that the request could be interpreted as an anticipatory breach, and offered to negotiate a buyout of the remaining contract term if the NRA wished to end the relationship. UWS ultimately provided the requested data but the NRA never responded to its counsel’s letter. A payment due from the NRA on September 1, 2019, was missed without explanation–an unusual event.

UWS sued for breach and anticipatory breach. At trial, it proffered Jury Instruction 21, based on Restatement § 251, which would have allowed the jury to treat the NRA’s silence and failure to provide “adequate assurance” as repudiation. It read:

Where reasonable grounds arise to believe that one party to a contract will commit a breach by non-performance that would:
(1) Of itself constitute a repudiation of the contract, or
(2) So substantially impair the value of the contract to the other party at the time of the breach that it is just in the circumstances to allow him to recover damages based on all his remaining rights to performance
The other party may demand adequate assurance of due performance and may, if reasonable, suspend any performance for which he has not already received the agreed exchange until he receives such assurance.
The non-breaching [party] may treat as a repudiation the breaching party’s failure to provide within a reasonable time such assurance of due performance as is adequate in the circumstances of the particular case.

The trial court refused the instruction, finding that it did not accurate state the law of Virginia governing contracts not involving transactions in goods. The Court of Appeals and the Virginia Supreme Court both agreed that the trial judge was correct to refuse the instruction.

The court drew a distinction between the doctrine of anticipatory repudiation, which is part of the common law of contracts in Virginia, and the doctrine of adequate assurances, which is not. Repudiation occurs before performance is due. (See Bennett v. Sage Payment Solutions, Inc., 282 Va. 49, 56 (2011)). “The abandonment of a contract will give rise to a claim for anticipatory breach.” (See Board of Supervisors v. Ecology One, Inc., 219 Va. 29, 33 (1978)). For repudiation to constitute a breach of contract, “the repudiation must be clear, absolute, unequivocal, and must cover the entire performance of the contract.” (Bennett, 282 Va. at 59).

The adequate assurance doctrine, on the other hand, originated in the U.C.C., which is limited to contracts for the sale of goods. “U.C.C. § 2-609 was drafted to remedy the perceived ‘dilemma’ posed by the common law doctrine of anticipatory repudiation for when the apparently breaching party’s action are less certain or equivocal,” the court wrote. And because this dilemma is not unique to contracts for the sale of goods, the American Law Institute added the doctrine of adequate assurance to Section 251, which applies to all contracts.

But that’s the Restatement, not Virginia law. “To date,” the court observed, “no Virginia appellate court has recognized the right to demand adequate assurance under Restatement § 251.” The court held that the decision to adopt a new doctrine applicable to all contract disputes is for the legislative branch to make. Therefore, the trial court did not err in refusing to adopt the jury instruction as it did not accurately state the law in Virginia.

For anticipatory breach to lie in a contract dispute not involving the sale of goods, the alleged repudiation must be “clear, absolute, and unequivocal.” Ambiguous conduct or silence will not suffice. Virginia businesses cannot assume they have a right to demand “adequate assurance” in long-term service contracts.

The Court of Appeals decided a case last week demonstrating these principles. The case of Somers v. W.D. Campbell and Son, Inc. basically involved a situation where an individual believed an insurance company was obligated to maintain insurance on his daughter’s vehicle but the insurance company disagreed, pointing out that the parties never reached a meeting of the minds as to any such arrangement. The case was initiaed in general district court, was appealed to circuit court, and appealed again to the Virginia Court of Appeals. Each court reached the same conclusion: that without a meeting of the minds, no contract was ever formed.

The basic facts, according to the opinion, are these. In September 2018, David Somers purchased a car for his daughter Lindsay and helped her obtain insurance through Campbell Insurance, a company he had long used. Campbell obtained an insurance policy on the vehicle with Progressive. Although Lindsay was the named insured and Somers was listed as lienholder, Somers often made policy payments on her behalf due to her history of inconsistent payments. Somers declined offers from Campbell to add him as an additional insured or to put his payment information on file, preferring that Lindsay maintain full financial responsibility. Instead, Somers asked Campbell simply to protect his lienholder interest and notify him if Lindsay’s policy was threatened by non-payment.

In November 2019, Somers asked Campbell to find a new carrier that would allow annual payments, but no new policy was secured. Meanwhile, Progressive notified Lindsay her policy would expire on December 7, 2019, and canceled it for non-payment on that date. Campbell did not notify Somers of the cancellation. On December 31, Lindsay totaled the vehicle in an accident. That’s when Somers realized the insurance policy had been terminated. He sued Campbell, claiming that he had a contract with Campbell requiring it to “procure and maintain” insurance on the vehicle and to notify him of any issues relating to Lindsay’s policy.

The Court of Appeals agreed with the lower courts that there was no meeting of the minds sufficient to form a valid contract, so Campbell owed Somers nothing. “A valid contract requires mutual assent, or a ‘meeting of the minds,’ which ‘exists by an interaction between the parties,” the court wrote. That interaction must be “in the form of offer and acceptance, manifesting ‘by word, act[,] or conduct which evince the intention of the parties to contract.’” (citations omitted). A meeting of the minds can be shown by direct evidence of an actual agreement, or by indirect evidence of facts from which an agreement may be implied. (See Lacey v. Cardwell, 216 Va. 212, 223 (1975)). The court noted that “Ultimate resolution of the question whether there has been a binding settlement involves a determination of the parties’ intention, as objectively manifested” (quoting Snyder-Falkinham v. Stockburger, 249 Va. 376, 381 (1995)).

Here, there was no evidence of any actual or implied agreement. The court upheld the circuit court’s determination (which was entitled to a presumption of correctness) that the evidence was insufficient to demonstrate a meeting of the minds. Somers had proffered evidence that Campbell’s agent had promised to “try” to find another carrier to replace Progressive, but that discussion was insufficient to establish an enforceable contract. And Campbell was not legally required to notify Somers of the cancellation of Lindsay’s policy, since she was the sole insured.

Somers’ fall-back argument was that the parties “course of dealing” established the existence of a contract. The court rejected this argument as well. It defined “course of dealing” as “a sequence of conduct concerning previous transactions between the parties to a particular transaction that is fairly to be regarded as establishing a common basis of understanding for interpreting their expressions and other conduct” (citing Va. Code § 8.1A-303(b)) and noted that course of dealing is only relevant to explain or supplement the terms of an existing contract; it can’t be used to create a contract where none exists. (See Delta Star, Inc. v. Michael’s Carpet World, 276 Va. 524, 531 (2008)).