                              UNPUBLISHED

                   UNITED STATES COURT OF APPEALS
                       FOR THE FOURTH CIRCUIT


                              No. 04-1631



DANIEL J. MERENSTEIN, M.D.,

                                             Plaintiff - Appellant,

          versus

ST. PAUL FIRE & MARINE INSURANCE COMPANY,

                                              Defendant - Appellee.



Appeal from the United States District Court for the Eastern
District of Virginia, at Alexandria.  Claude M. Hilton, Chief
District Judge. (CA-04-139-A)


Argued:   May 26, 2005                      Decided:   July 12, 2005


Before MICHAEL, MOTZ, and KING, Circuit Judges.


Reversed and remanded by unpublished per curiam opinion.


ARGUED: Bruce Philip Merenstein, SCHNADER, HARRISON, SEGAL & LEWIS,
Philadelphia, Pennsylvania, for Appellant.      Elizabeth Stanulis
Skilling, HARMAN, CLAYTOR, CORRIGAN & WELLMAN, Glen Allen,
Virginia, for Appellee.     ON BRIEF: Nancy Winkelman, SCHNADER,
HARRISON, SEGAL & LEWIS, Philadelphia, Pennsylvania, for Appellant.
John M. Claytor, HARMAN, CLAYTOR, CORRIGAN & WELLMAN, Glen Allen,
Virginia, for Appellee.


Unpublished opinions are not binding precedent in this circuit.
See Local Rule 36(c).
PER CURIAM:

     Daniel J. Merenstein, M.D., appeals the district court’s

dismissal, pursuant to Rule 12(b)(6) of the Federal Rules of Civil

Procedure, of his claim for actual fraud against St. Paul Fire &

Marine   Insurance   Company   (“St.    Paul”).   As   explained   below,

Merenstein’s Complaint sufficiently alleges the elements of actual

fraud under Virginia law, and we therefore reverse and remand.



                                   I.

                                   A.

     Merenstein filed his Complaint on February 9, 2004, in the

Eastern District of Virginia, pursuant to that court’s diversity

jurisdiction.   See 28 U.S.C. § 1332(a).      Merenstein is a physician

residing in the District of Columbia, and St. Paul is a Minnesota

corporation.    Compl. at ¶¶ 2-3.1      From July 1, 2000, to July 1,

2001, Merenstein was an insured under a professional liability

insurance policy issued by St. Paul to his employer, INOVA Health

System Foundation.    Id. at ¶¶ 4-5.      While covered by this policy,

Merenstein was sued for medical malpractice in the Circuit Court

for the County of Fairfax, Virginia.       Id. at ¶ 6.



     1
      We recite the facts substantially as they are alleged in the
Complaint. We are obliged, in our review of the district court’s
Rule 12(b)(6) dismissal, to accept all well-pleaded facts as true
and to view the allegations of the Complaint in the light most
favorable to Merenstein. See Lambeth v. Bd. of Comm’rs, 407 F.3d
266, 268 (4th Cir. 2005).

                                   2
      On approximately March 1, 2003, Bill Rigsbee, a St. Paul

employee      experienced   in    adjusting        medical     malpractice      claims,

requested      that   Merenstein        provide     approval     to    St.    Paul    for

settlement of his exposure in the malpractice action for the sum of

$466,666.66.      Compl. at ¶¶ 9, 11, 22.               At that time, Merenstein

asked Rigsbee if the payment of such a settlement “would be likely

to have any possible adverse implications on [Merenstein’s] ability

to   obtain    liability    insurance        coverage     in   the    future,    or   to

practice      medicine.”      Id.       at   ¶    12.     Rigsbee      responded      “in

unequivocal terms that the proposed settlement . . . would have no

adverse or negative effect whatsoever on [Merenstein’s] future

ability to obtain liability insurance coverage.”                      Id. at ¶ 13.

      In   reliance    upon      this    assurance       by    Rigsbee,      Merenstein

approved the proposed settlement.                Compl. at ¶ 14.      As a result, on

approximately March 14, 2003, the malpractice action was dismissed

as having been settled by agreement of all parties.                       Id. at ¶ 8.

Thereafter, Merenstein attempted to obtain liability insurance

coverage from several different insurance carriers, only to be

rejected based upon the malpractice settlement.                        Id. at ¶ 15.2

Without liability insurance coverage, Merenstein has been unable to

continue his private medical practice.                  Id. at ¶ 16.




      2
      The Complaint does not specify whether Merenstein has ever
sought such coverage from St. Paul.

                                             3
     In support of his actual fraud claim, Merenstein alleges that

Rigsbee’s    assurance     to   him       constituted    an   intentional

misrepresentation   of    material    fact.     Compl.   at   ¶   17,   24.

Merenstein also maintains that Rigsbee knew that his representation

was false because his job involved adjusting medical malpractice

claims for St. Paul.     Id. at ¶ 22.       According to the Complaint,

Rigsbee assured Merenstein of the foregoing not only to obtain his

approval of the proposed settlement, but also, at least in part, to

keep INOVA satisfied with St. Paul’s adjusting services.           Id. at

¶ 23.     As a result of his reliance on Rigsbee’s assurance,

Merenstein lost the ability to practice medicine in the private

sector.   Id. at ¶ 25.   He therefore seeks compensatory damages from

St. Paul for loss of his earning capacity and for his mental

anguish, as well as an award of punitive damages.



                                     B.

     On March 1, 2004, St. Paul moved to dismiss the Complaint

pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure

for failure to state a claim upon which relief can be granted.          St.

Paul contended that the alleged representation made by Rigsbee is

not actionable under Virginia law, because (1) it was not of a

present, existing fact, but rather was merely his opinion; and (2)

it was not one on which Merenstein could have reasonably relied.

Addressing only St. Paul’s first contention, the court dismissed


                                      4
Merenstein’s Complaint by Order of April 15, 2004 (the “Order”).

Merenstein has filed a timely notice of appeal, and we possess

jurisdiction under 28 U.S.C. § 1291.3



                                II.

     We review de novo a district court’s dismissal of a complaint

under Rule 12(b)(6).   Lambeth v. Bd. of Comm’rs, 407 F.3d 266, 268

(4th Cir. 2005).    Such a dismissal is appropriate only if it

appears beyond doubt that the plaintiff can prove no set of facts

that would entitle him to relief.     Id.   Viewing the plaintiff’s

allegations in the light most favorable to him, we must assess

whether the complaint “adequately state[s] a set of facts which, if

proven to be true, would entitle [him] to judicial relief.”     Id.

(internal quotation marks omitted).



                               III.

     As recognized by the district court, in order to state a claim

for actual fraud under Virginia law, a plaintiff must establish the

following:   “(1) a false representation, (2) of a material fact,

(3) made intentionally and knowingly, (4) with intent to mislead,

(5) reliance by the party misled, and (6) resulting damage to the


     3
      In addition to the claim of actual fraud, the Complaint
asserts a constructive fraud claim. The district court did not
distinguish between those claims in its Order dismissing the
Complaint. The viability of the constructive fraud claim is not
before us on appeal.

                                 5
party misled.”    Order at 3 (citing Evaluation Research Corp. v.

Alequin,   439   S.E.2d   387,   390   (Va.   1994)).4      In   assessing

Merenstein’s actual fraud claim, the district court appears to have

conflated two general legal principles of Virginia law — first,

that neither unfulfilled promises nor statements as to future

events can constitute fraud, and second, that opinions also are

nonactionable as fraud.     Applying these general rules, the court

concluded that Rigsbee’s assurance did not constitute an adequate

predicate for Merenstein’s actual fraud claim.           Specifically, the

district court observed that a claim of fraud

     must relate to a present or pre-existing fact and cannot
     be predicated on unfulfilled promises or statements as to
     future events.    Patrick v. Summers, 235 Va. 452, 454
     (1988). Such promises or statements are merely opinions
     which are not actionable under Virginia law. See Lambert
     v. Downtown Garage, Inc., 262 Va. 707, 717 (2001); See
     Saxby v. Southern Land Co., 109 Va. 196, 198 (1909).

          In the case at hand, the alleged representation is
     a statement about the likelihood of occurrence of a
     future event, that is, the likelihood that insurance
     carriers would or would not provide future insurance
     coverage to the Plaintiff after the settlement. Such a
     statement can only be characterized as an opinion. As
     such, Plaintiff has failed to state a claim for actual
     . . . fraud.

Order at 3.

     As explained below, we are unable to agree with the district

court for two reasons.       First, although the court recognized

     4
      In this diversity matter, it is undisputed that we apply the
substantive law of Virginia. See Seabulk Offshore, Ltd. v. Am.
Home Assurance Co., 377 F.3d 408, 418 (4th Cir. 2004) (citing Erie
R.R. Co. v. Tompkins, 304 U.S. 64, 78 (1938)).

                                   6
Virginia’s general rule that a fraud claim cannot be predicated on

unfulfilled promises or statements as to future events, it failed

to address an applicable exception (the “exception”):    a promise

made in the absence of a present intention of performing can

constitute fraud.      Second, the court improperly characterized

Rigsbee’s assurance to Merenstein as a nonactionable “opinion”

under Virginia law, failing to recognize that it instead could be

construed as a litigable affirmation of present fact.   We address

these issues in turn.



                                 A.

     As the district court observed, under the general rule, a

fraud claim must be premised on the misrepresentation of a present

or pre-existing fact, and it cannot ordinarily be predicated on

unfulfilled promises or statements as to future events. Patrick v.

Summers, 369 S.E.2d 162, 164 (Va. 1988); Lloyd v. Smith, 142 S.E.

363, 365 (Va. 1928).    However, the Supreme Court of Virginia has

also recognized the exception:        that is, a fraud claim “may

sometimes be predicated on promises which are made with a present

intention not to perform them, or on promises made without any

intention to perform them.”     Lloyd, 142 S.E. at 365; see also

Patrick, 369 S.E.2d at 164.    The basis for the exception is that

“the state of the promisor’s mind at the time he makes the promise




                                 7
is a fact,” so that, if he misrepresents his state of mind, “he

misrepresents a then existing fact.”           Lloyd, 142 S.E. at 366.5

     Merenstein’s   actual   fraud       claim,   as   spelled   out   in   the

Complaint, is readily analogous to those underlying the fraud

claims in Boykin v. Hermitage Realty, 360 S.E.2d 177 (Va. 1987),

where the Supreme Court of Virginia applied the exception.                  The

Boykin plaintiffs (four married couples) purchased condominiums,

and the defendants (Hermitage Realty and its representative) served

as the exclusive sales agent of the condominium developer.                  360

S.E.2d at 177-78.   The agent had assured the plaintiffs, prior to

their purchases, that a wooded area behind the condominiums would

not be developed in the future.      Id. at 178.       At the time of these

representations, however, the agent was aware that the wooded area

was a proposed playground site.          Id.   The plaintiffs, unaware of

any such plans and relying upon the agent’s assurances, purchased

the condominiums; several months later, the developer constructed

the planned playground.      Id.     In upholding the verdict for the



     5
      The Supreme Court of Virginia has consistently upheld fraud
claims predicated on promises made without the present intent to
perform. See Elliott v. Shore Stop, Inc., 384 S.E.2d 752, 756 (Va.
1989); Colonial Ford Truck Sales, Inc. v. Schneider, 325 S.E.2d 91,
94 (Va. 1985); Sea-Land Serv., Inc. v. O’Neal, 297 S.E.2d 647, 651-
52 (Va. 1982); see also Flip Mortgage Corp. v. McElhone, 841 F.2d
531, 537 (4th Cir. 1988) (allowing fraud claim, under Virginia law,
based on breach of contract where evidence was sufficient to
establish that defendant never intended to perform); cf. Patrick,
369 S.E.2d at 164 (denying fraud claim absent sufficient proof that
defendant had intent to defraud at time he promised to purchase
plaintiff’s property).

                                     8
plaintiffs on their fraud claims, the Supreme Court of Virginia

observed    that   the   agent’s      assurances      —    regarding    the   future

conduct of the third-party developer — “were promises of privacy

made in reply to express inquiries.”              Id. at 179.       The court also

concluded     that       these       assurances       constituted       “deliberate

misrepresentations of existing facts, all made to induce the

several    plaintiffs     to   pay    a   premium     price   for   property    they

otherwise would not have bought.”              Id.

     In    this    matter,     analogously,     the    Complaint     alleges    that

Rigsbee    gave    an   unequivocal       assurance    respecting      Merenstein’s

future insurability to induce him to agree to the malpractice

settlement — something he otherwise would not have done.                       As in

Boykin, Rigsbee’s assurance related to the prospective conduct of

third parties (i.e., other insurers).                     And, according to the

Complaint, Rigsbee knew that his representation was false at the

time of its making.        Therefore, under Boykin, Rigsbee’s assurance

— construed as a promise made with present fraudulent intent —

constitutes a sufficient predicate for Merenstein’s actual fraud

claim.6




     6
      St. Paul seeks to distinguish the Boykin decision, contending
that the agent’s assurances were attributable to the condominium
developer and, thus, did not regard the future conduct of a “third
party.” This contention, however, finds no support in Boykin, in
which “[t]he plaintiffs nonsuited their claims against” the
developer. 360 S.E.2d at 178 n.*.

                                           9
                                         B.

     In dismissing the Complaint, the district court also relied on

Saxby v. Southern Land Co., where the Supreme Court of Virginia

ruled that “[t]he mere expression of an opinion, however strong and

positive the language may be, is no fraud.”             63 S.E. 423, 424 (Va.

1909).    Significantly, however, the district court failed to fully

assess the Saxby court’s definition of “opinions” in this context,

i.e., “[s]tatements which are vague and indefinite in their nature

and terms, or are merely loose, conjectural or exaggerated.”                  Id.

The court explained that such opinions cannot serve as predicates

for fraud claims, because “a man is not justified in placing

reliance upon them.”      Id.7

     In this proceeding, by contrast, the evidence may show that

Rigsbee   was   aware   that     Merenstein   would     be   unable   to   obtain

liability   insurance    after     the    malpractice    settlement,       despite

Rigsbee’s assurance to the contrary.           In this context, Rigsbee’s



     7
      The Saxby plaintiff-buyers had predicated their fraud claims,
arising from the sale of a farm, on the defendant-seller’s
misestimation of the property’s acreage and misstatements of the
value and volume of timber and potatoes that the land would yield.
63 S.E. at 424. The court characterized the acreage estimation as
merely a “manifest” expression of “opinion from appearances,” and
the statements as to the timber and potatoes as “mere trade talk
. . . with respect to matters of an essentially uncertain nature.”
Id.    Similarly, in Lambert v. Downtown Garage, Inc., another
decision relied on by the district court, the court observed that
the statement that a wrecked car was now in “excellent” condition,
without more, was “clearly a matter of opinion in the manner of
puffing,” and thus nonactionable as fraud. 553 S.E.2d 714, 717
(Va. 2001).

                                         10
assurance should not be construed as a mere opinion, but rather an

affirmation of a present fact:           insured physicians who agree to

settle medical malpractice claims do not encounter difficulty in

thereafter obtaining liability coverage.             Cf. Horner v. Ahern, 153

S.E.2d 216, 220 (Va. 1967) (concluding that, even if seller’s

assurance of “no termite damage” was “expression of opinion,” it

could amount to affirmation of fact sufficient to support fraud

claim, where seller knew of facts incongruous with opinion).

      Significantly, there is no “bright line test” in Virginia “to

ascertain   whether     false   representations       constitute      matters   of

opinion or statements of fact.”               Mortarino v. Consultant Eng’g

Servs., Inc., 467 S.E.2d 778, 781 (Va. 1996).            Instead, “each case

must in a large measure be adjudged upon its own facts, taking into

consideration the nature of the representation and the meaning of

the   language   used    as   applied    to    the   subject    matter    and   as

interpreted by the surrounding circumstances.”                      Id. (internal

quotation   marks     omitted).         This    principle      is    particularly

significant in the posture of this appeal, where the underlying

Complaint was dismissed under Rule 12(b)(6), prior to any discovery

being conducted.        While Merenstein may face an uphill climb in

proving his case, his Complaint is sufficient to state a claim of

actual fraud.8


      8
      In rendering this decision, we also reject St. Paul’s
alternative ground for affirming the district court, i.e., that
Rigsbee’s assurance was not one on which Merenstein could have

                                        11
                                  IV.

     Pursuant   to   the   foregoing,   we   reverse   the   dismissal   of

Merenstein’s actual fraud claim and remand for such other and

further proceedings as may be appropriate.

                                                  REVERSED AND REMANDED




reasonably relied. St. Paul urges us to accept as true several
“self-evident” facts that are not pleaded in the Complaint, such as
that “a claims adjustor for one company would not have knowledge of
the underwriting standards and application guidelines of other
companies.” Appellee’s Br. at 11. The “reasonable reliance” issue
— like the closely related question of whether Rigsbee’s assurance
constituted an unfulfilled promise, statement as to future events,
opinion, or affirmation of present fact — warrants discovery and
is not properly resolved on a Rule 12(b)(6) motion.

                                   12
