Contract – Defendant prevails on breach of promissory notes claim

Where there was sufficient evidence to support the trial court’s conclusion that two promissory notes were not enforceable obligations, because they were an arrangement made for reasons other than repayment, its decision was affirmed.

Background

Kirk T. Schroder appeals the trial court’s judgment dismissing his complaint against Lori Lynn, seeking payment on two alleged promissory notes.

Enforceability

Schroder contends that the circuit court ruled against him on the theory that he fraudulently induced Lynn to sign the promissory notes. He argues that the court erred in doing so because (1) Lynn failed to preserve fraud in the inducement as an affirmative defense and (2) the trial court did not apply the heightened standard applicable to fraud claims.

Those arguments suffer from a faulty premise, however, because fraud in the inducement was neither Lynn’s theory of the case nor the basis for the trial court’s ruling. Rather, the circuit court made specific findings that the notes were not “true

obligations to pay” and were “more likely created for the purpose of hiding gifts” and to aid the parties in separate litigation. After considering the divergent testimony between the parties, the court found that Schroder and Lynn agreed to create only an appearance that they had entered into a contract, but never intended to be bound by its terms.

Accordingly, Schroder’s first two assignments of error relating to fraud or fraud in the inducement do not challenge a ruling that was made by the circuit court and therefore must be dismissed.

Turning to the circuit court’s finding that the notes were not enforceable obligations, Lynn testified that Schroder told her that she did not have to repay the promissory notes and that she could shred them. Lynn did so and never returned the notes to Schroder. Schroder did not ask for repayment until Lynn’s falling out with

the school years after the notes were allegedly due. The circuit court implicitly found Lynn more credible in its determination that there was no meeting of the minds between the parties necessary to form a valid contract.

Lynn testified that she did not ask anyone to donate funds to pay her attorney’s fees and the promissory notes were a later arrangement made for reasons other than repayment. That testimony is bolstered by Schroder’s statement to Lynn’s divorce counsel that Lynn had a “benefactor” who was paying her legal fees. Accepting the circuit court’s credibility determinations, the parties objectively manifested an intent not to be bound by the terms of the notes. As a result, the circuit court did not err in concluding that there was no contract.

Evidentiary rulings

Schroder argues that the circuit court should have excluded: (1) Schroder’s June 2017 email to Lynn’s attorney stating that Lynn had a “benefactor” who was paying her legal fees; (2) Lynn’s cross-examination questions to Schroder about how he calculated the amount of debt owed; (3) Schroder’s 2020 statements about what he believed to have been “unfair”; (4) Lynn’s testimony about how she interpreted Schroder’s statements about the notes and (5) Lynn’s testimony about her friction with Oliver and the mystery school.

Schroder primarily argues that the admitted evidence is irrelevant. Evidence is relevant if it has “any tendency to make the existence of any fact in issue more probable or less probable than it would be without the evidence.” Under that low bar, the trial court did not abuse its discretion by admitting the evidence of which Schroder complains. Evidence such as Schroder’s characterization of the funds as originating from a “benefactor,” Lynn’s understanding of the notes based on Schroder’s statements, or Lynn’s relationship with the school shortly before Schroder demanded repayment were all relevant to whether the parties had a meeting of the minds concerning the notes.

Attorney’s fees

Lynn asks for her attorney’s fees in connection with this appeal. The decision to award attorney’s fees incurred on appeal is within the sound discretion of this court. The court “award[s] appellate fees only in the unusual case where the arguments on appeal are ‘not fairly debatable under any reasonable construction of the record or the governing legal principles.’” Because the arguments here are fairly debatable, Lynn’s request for attorney’s fees is denied.

Affirmed.

Schroder v. Schelin, Record No. 0326-25-2, April 14, 2026. CAV (unpublished opinion) (Duffan). From the Circuit Court of Goochland County (Sanner). Bradley P. Marrs (Marrs & Henry, on briefs), for appellant. Scott D. Cardani (Critzer Cardani, PC, on brief), for appellee. VLW 026-7-142. 9 pp.

Full-Text Opinion

VLW 026-7-142
Virginia Lawyers Weekly