ANALYSIS OF AUGUST 31, 2017 SUPREME COURT OPINIONS
(Posted August 31, 2017) The Supreme Court gives us a bountiful crop of decisions today – six published opinions and one published order. This is the largest batch we’ve seen in a single day since mid-April.
Freedom of Information
Once upon a time, citizens in FOIA appeals enjoyed overwhelming success in the Supreme Court. That trend is no more; today the court hands public bodies the latest in an unbroken string of appellate successes that stretch back almost a decade. (The last time the citizen prevailed in one, as far as I can tell, was September 2007, in Fenter v. Norfolk Airport Authority.)
Today’s decision comes in Virginia Education Ass’n v. Davison, which combines three separate appeals – with separate record numbers – into a single opinion. Davison asked the Loudoun County Schools for records relating to Standards of Learning test results. The school system told him, “Sorry; we don’t have those records. The Virginia Department of Education does.”
Fair enough; Davison sent a FOA request to the Department for Loudoun’s aggregated test scores, “sorted by teacher and by school over the past five years along with an explanation of the methodology used to calculate the assessment scores.” Note that he’s not asking for individual students’ scores, which would be exempt from disclosure.
The Department wrote back, saying that it doesn’t segregate information by individual teacher. Oh yes you do, Davison replied, and gave the Department a link to its own website, noting that the Department compiled just such information. (Ulp!)
But the Department wasn’t through resisting. It said that the information Davison requested “only exist in a database that contains information directly related to students, [and] they are considered scholastic records” that are exempt. Davison thrust back that the Department could produce summary reports from this database that didn’t identify students, as it had done in the past. The Department “acknowledged that such reports did exist at one time, but were no longer produced …”
If this is starting to look fishy to you, you’ve got company. This last refusal was enough for Davison; he filed a mandamus petition in circuit court. After the Virginia Education Association and the Loudoun School Board intervened, the court convened a hearing on the defendants’ demurrers. It eventually overruled them, issued a writ of mandamus, and imposed $35,000 in attorneys’ fees upon the Department and the school board. All three appellants appealed and each got a writ.
Today the justices rule that while this appeal doesn’t present issues of student confidentiality, it does for teachers. The statute exempts “Teacher performance indicators, or other data used by the local school board to judge the performance or quality of a teacher, maintained in a teacher’s personnel file or otherwise …” Davison urged that this exemption didn’t apply, because the school board didn’t actually use SoL scores in teacher evaluations. But the court rules today that that doesn’t matter:
Applying the rule of the last antecedent to Code § 22.1- 295.1(C), we conclude that the phrase “used by the local school board” refers solely to the phrase “other data” and not to the phrase “teacher performance indicators.” Read through that prism, it is only the “other data” that must be used by the local school board in order for it to be held confidential. Actual use does not apply to teacher performance indicators.
Hence we have an issue of case-dispositive punctuation; the appellants win because of a comma. My humble view is that, based on the rules of grammar as I understand and apply them, this analysis is unassailable. The statute exempts two things: teacher performance indicators, and other matters that the school board actually uses. The indicators themselves are exempt whether the board uses them or not.
The court thus reverses and remands, but there’s one point on which I’m not clear. All of the appellants win, so Davison loses. The court rules that the trial court erred in imposing part of the fee award upon the school board, since it emphatically was not the public body that maintained the records. But the Supreme Court remands for recalculation of the fee award. I don’t know why the court does that; FOIA only allows attorney’s fee awards to a party who successfully sues a public body, so I expected a reversal and final judgment. Perhaps there was an unappealed aspect to the case below on which Davison won, though today’s opinion doesn’t describe it.
The merits issue in City of Danville v. Garrett is actually the secondary attraction for me, and I suspect that my fellow appellate practitioners will agree. This is an appeal of a circuit court’s decision against the City of Danville in litigation over a police officer’s disability benefits.
Officer Garrett was injured in the line of duty and sought an award of statutory disability benefits, equal to 2/3 of her average salary. The City replied that its ordinance only allowed disability benefits of 30%. A trial judge agreed with Garrett.
Today the justices reverse and enter final judgment for the City. The Supreme Court rules that Danville didn’t opt into the state system, as allowed by a statute; instead it created its own system with lower benefits for its police officers. That means that the state benefit rate didn’t govern Officer Garrett’s claim.
Today’s opinion is only five pages long, the shortest decision of the day. As I see it, the most important language is contained in a footnote (which is quite often where the goblins hang out). Here it is:
This Court granted the City’s motion for an extension of time to file its petition for appeal under Rule 5:5. In response thereto, Garrett contends that this Court lacks subject matter jurisdiction over this appeal under Code § 8.01-671. We reject that contention, concluding that Code § 8.01-671 does not affect the Court’s subject matter jurisdiction.
I’ve seen the briefs in this case. In that context, this short passage is beyond surprising to me; it’s shocking. I’ll explain why.
Last year, the City filed its petition for appeal a day late. That’s fatal; the deadline for filing the petition is mandatory, and the court has interpreted it as jurisdictional, presumably because the three-month (as of July 2017, it’s now 90 days) deadline is imposed by statute.
The City later moved the Supreme Court to extend the filing deadline, as Rule 5:5 allows. Officer Garrett replied that the City had provided no good excuse for missing the mandatory deadline. In the past, the court has regularly attributed an error by a party’s agent — including an attorney — to the party. You chose your lawyer or your printing consultant or your courier, and that person made a mistake; hence that becomes your mistake, so you don’t get relief. But the justices granted the City’s motion anyway, enlarging the time to make the late filing timely. The court eventually granted this writ, and as we’ve seen, it reverses today.
There’s more than that. The statute imposing the three-month deadline for petitions only allowed extensions of time in criminal appeals; there is no authority to extend in civil cases. This situation was what prompted the Judicial Council to recommend that the statute be changed, and the General Assembly did so in the 2017 session, so now the court can extend the filing deadline in civil appeals, too. But that statutory change came too late for this appeal; the filing deadline here was August 2016. This petition should have been DOA.
In her merits brief, Officer Garrett again objected that the City’s petition was filed too late, and expressly pointed out that the court accordingly didn’t have jurisdiction over the case. She cited the criminal/civil dichotomy in the statute that gave the court the power to extend the otherwise fatal deadline. I fully expected the court to rule accordingly, and to dismiss this appeal as improvidently awarded.
The court’s ruling surprises me in the casual, almost backhanded way in which it adjudicates an issue as vital as its own jurisdiction with virtually no discussion. This footnote gives no hint of the events I’ve related above; indeed, I never would have known about the legal issues involved if Officer Garrett’s lawyer hadn’t called me a few months ago to ask about the situation. My forecast to him about what would happen turns out to have been incorrect.
In previous cases, the court has emphasized that it must strictly adhere to the limits that the legislature has imposed upon the court’s jurisdiction. Today, instead of respecting those limits, the court essentially ignores them, ruling that it had a power that the legislature had unambiguously withheld until this year.
This is the third recent decision of which I’m aware in which the Supreme Court has adjudicated a case over which it had no jurisdiction. The other two came last year: Environment Specialist v. Wells Fargo, 291 Va. 111 (2016), where the appealing party was clearly not aggrieved, and Ragland v. Soggin, 291 Va. 282 (2016), where the $200 sanctions fell below an unmistakable $500 jurisdictional minimum for Supreme Court review.
I was also greatly surprised by the reasoning in the footnote. It asserts that Officer Garrett’s argument raises the absence of subject-matter jurisdiction, and then concludes that the statute doesn’t affect that component of jurisdiction.
But her briefs don’t say that; I’ve read them again this morning, and the phrase subject matter doesn’t appear anywhere. Her argument implicates one of the “other conditions of fact that constitute prerequisites of the authority of the court to proceed to judgment.” Verizon Online v. Horbal, 293 Va. 176 (2017). There is no plausible contention that she waived her objection at any point. The Supreme Court’s approach is to effectively rewrite Officer Garrett’s briefs to assert something else, and then shoot that phantom argument down.
In case you’re having trouble reading between the lines, I believe this conclusion is wholly incorrect. The court had no business deciding this case on the merits after the appellant missed one of the classic mandatory-and-jurisdictional deadlines in the rulebook. I cannot say why the justices chose to overlook this fatal error, because I’m not a court insider. All I can tell you is that this decision is final and unappealable; the Supreme Court is the court of last resort for issues involving purely Virginia practice and procedure.
What do you do when you apply for a land-use permit, you get one, you spend money building a structure consistent with the permit, and then months later the local government tells you to take it down because the permitting decision was incorrect?
For many years, the answer was, “You take the building down.” Supreme Court caselaw indicated that a government official couldn’t authorize a violation of land-use ordinances, because doing so would make him, not the elected governing body, the policymaker. This is another way of stating that localities, like other governmental units, aren’t subject to the doctrine of estoppel and waiver when they act in their governmental capacity.
Three landowners on the Northern Neck found themselves in this very pickle when they got a permit to build a two-story detached garage adjacent to their home. After they filed their application for a permit, the county zoning administrator visited the property and okayed the project. The owners spent $27,000 building the garage.
The problem is that under the county’s ordinance, you can’t build a garage that’s higher than the home itself, and the home was only one story. Several months after the end of construction, a new zoning administrator came by and told them they were in violation. (Today’s opinion doesn’t go into detail, but I infer that the notice told them to either get a variance or demolish the garage.)
That’s the setup for Richmond County v. Rhoads. A trial court had ruled in favor of the owners – that’s why we have the county on the anterior side of the “v.” – and today the justices affirm. The court cites a 1995 remedial statute, by which the legislature provided succor for folks in this situation. The statute applies when three circumstances are present:
(1) a “written order, requirement, decision or determination made by the zoning administrator;”
(2) the passage of at least 60 days from the zoning administrator’s determination; and
(3) a material change in position “in good faith reliance on the action of the zoning administrator.”
The parties had effectively stipulated to these elements. But the county wasn’t done; it claimed that the first administrator’s permit wasn’t a “written order, requirement, decision or determination.” Oh, yes it was, the court replies today. It has all the earmarks of an official government action.
The county also claimed that the statute only prohibits a subsequent zoning administrator from rescinding a permit; it doesn’t apply to other entities such as the board of supervisors or a court. No dice here, too; this is a remedial statute and governs actions by those other entities, too.
A contract for the sale of land is at the heart of Denton v. Browntown Valley Associates, Inc. from beautiful Warren County. Denton owned a 120-acre parcel and contracted to sell it to Browntown for $740K. Surprisingly for a contract of that size, the earnest-money deposit was just $500. If Inspector Clouseau were evaluating this appeal, he would regard that as “une clue” that trouble is brewing.
On the closing date, the buyer backed off, claiming that it couldn’t get an agreement with a neighboring landowner about access. The buyer asked for a release and its $500 back. Since there was no contingency dealing with that other landowner, the seller determined to hold the buyer to the contract. He tried to resell it but got no other buyers.
The seller decided to sue. He had a choice: sue for damages or seek specific performance. A damages action would require proof of what a willing buyer would pay (you subtract that figure from the contract price to get the damages), and he didn’t have one of those. He therefore chose specific performance.
The buyer had a plausible defense up its sleeve. It noted that four of the 120 acres were subject to a title defect involving a neighboring parcel. With that defect, the seller couldn’t deliver good title, so specific performance wasn’t available. The seller responded by producing an old deed carrying out a boundary-line agreement with the neighboring owner.
I apologize for the fact that it gets even more complicated here; but the parties aren’t finished making material mistakes, and I’m just the messenger. The buyer noted that there was a trustee’s deed for the four acres in the chain of title. And the seller’s boundary-line deed, although dated a year before the trustee’s deed, wasn’t recorded until eight months after the trustee’s deed. (Now, why would you wait to record a deed? But I digress.) The seller countered that the grantee of the trustee’s deed hadn’t raised a fuss in the ensuing 15+ years, so that wasn’t a problem.
Now we’re off to court so a circuit judge can sort all this out. The court (1) denied a motion in limine to exclude the trustee’s deed and (2) retroactively granted the buyer’s motion to strike, after having taken it under advisement to let all the evidence in. It granted judgment to the buyer and added a $48K attorney’s fee award under the fee-shifting provision in the contract.
Today the justices affirm with a series of what I view as no-nonsense rulings. The seller assigned a slew of errors – at last eight that the court mentions – and the justices reject each one. They rule that the trustee’s deed was relevant to the marketability of the title, so the judge properly admitted and considered it. They also turn aside the seller’s contention that the buyer would have known about any title issues if it had conducted a title examination: “Regardless of the contract’s requirement for a title examination, it is the seller who bears the burden of proving that he has marketable title. … That is doubly true where the seller seeks specific performance of the contract.”
The Supreme Court also reaches back into the dim recesses of its early decisions, where it had held (in 1831) that when a trifling portion of the property is in dispute, that doesn’t vitiate the entire contract; you just make an allowance for the uncertainty and perform the rest.
But the justices’ judicial ancestors back in the antebellum days were no fools. That approach is fine where the disputed area possesses “no particular value in relation to the general tract.” Here. the court concludes that the trial judge considered that factor and didn’t abuse his discretion in doing so.
The court finally approves the attorneys’ fee award, even in the face of a plausible first-breach argument. That doctrine holds that the first party to breach a contract cannot sue to enforce it; the seller argued that the buyer was the first party to breach an obligation here.
In another appeal, that might work; but in a development that’s painfully familiar to appellate practitioners, the seller hadn’t pleaded this affirmative defense in the trial court, so it’s waived. The court also rejects the contention that fees were inappropriate because the seller’s arguments below were reasonable, even if ultimately unsuccessful. This argument might work in a sanctions appeal, where issues like good faith are case-dispositive. But this is a plain-old fee-shifting provision, so good faith (or not) isn’t material.
The court adjudicates two appeals in a single published order entitled Williams v. Commonwealth. The opinion tells a sobering story about the state of Virginia’s mental-health system, at least when it intersects with the criminal-justice system.
Two separate grand juries indicted Williams in 2014 for felony assault; the second jury added charges of attempted murder. The victim in the cases was his wife; the offenses occurred six weeks apart. His attorney and the prosecutor reached an agreement by which Williams would plead guilty to the first assault charge and not guilty by reason of insanity to the later charges.
The trial judge heard evidence, including from mental-health professionals, in support of the plea agreement before ultimately accepting both pleas. The court sentenced Williams to serve five years for the assault and ordered involuntary civil commitment on the finding of temporary insanity.
So far this all seems normal. The part that generates an appeal is the judge’s conclusion that Williams would serve the five years first and only then be held for mental evaluation and treatment. Williams had asked the court to allow him to be treated first and incarcerated second, but on appeal he asserted specific legal arguments instead of a general request.
The problem with this approach is that old nemesis, the contemporaneous-objection rule. I’ve preached this sermon often enough that I don’t need to repeat it in depth: you have to give the trial court an opportunity to rule in the first instance.
That being said, the rule contains an ends-of-justice exception, and Williams sought to invoke that exception here to get Supreme Court review anyway. In a divided ruling, the court rules that this case doesn’t satisfy the ends-of-justice exception because the trial court’s ruling doesn’t create a grave injustice.
Williams contended that with the prison-first approach, he was in effect being punished for having a mental illness. The court’s five-member majority – as with other orders, it doesn’t identify its author – concludes that nothing in the sentencing statutes mandates that treatment must precede incarceration, so there’s nothing manifestly wrong here.
The majority adds two salient points here. First, prisons are required by law to provide inmates with health care, including for mental illnesses. Williams can and indeed must be treated while he is incarcerated. And if the Director of Corrections determines that the prison system can’t provide Williams with the care he needs, he can petition a court to transfer an inmate to a hospital. This is enough, the majority finds, to address any concern about punishment first and treatment second.
Justice Mims writes separately, and you can almost hear him sighing: “I reluctantly concur with the Court’s ruling declining to apply the ends of justice exception to Rule 5:25 in this case.” He feels that this case illustrates the need for the General Assembly to address this issue, since “the statutes are deficient because they do not direct courts how to prioritize incarceration and commitment when a defendant is found guilty of some criminal offenses but not guilty of others by reason of insanity.”
Here’s another short quote that explains the origin of his concern: “But medical care is merely an incidental function of correctional facilities, which are principally charged with custody and rehabilitation. Medical care, including mental health treatment, is the principal responsibility of hospitals and other treatment facilities.”
This struck a familiar chord with me. One of my pals is in the corrections field, and he has told me on several occasions that the largest facility here in Tidewater that provides mental-health treatment is the Virginia Beach City Jail. We are warehousing the mentally ill in facilities that are ill-suited to provide treatment for those conditions. Justice Mims provides a compelling argument for the legislature to step in.
Justice Powell dissents, and if you’ve read her dissents, you know that there are no pulled punches. She insists that the trial court did indeed get the order dead-wrong, even under a deferential abuse-of-discretion standard. She notes that the court elevated a discretionary sentence (for the assault) over a mandatory commitment.
A court can subject a felon to a wide range of sentences, and even suspend execution of any prison term in its entirety. But upon a finding of not guilty by reason of insanity, there was no discretion: state law mandates immediate (“At the conclusion of the hearing”) commitment to a hospital. This trial court received and expressly credited evidence that Williams needed inpatient treatment, so it erred by not doing as that statute mandates.
I have virtually no expertise in mental-health issues, so I hesitate to wade in beyond the above analysis of the legal rulings. I’ll only add that while I agree with Justice Mims that further legislative action is urgent, I’m not going to hold my breath, given what I’ve seen about how the General Assembly chooses to treat those accused or convicted of crimes, even with a mental disorder.
The justices wrestle with an issue that has split federal circuit courts on the effect of a release upon FELA claims. Today’s decision is Cole v. Norfolk Southern Railway Co.
My readers know that the Federal Employers’ Liability Act covers employees of railroad companies. It liberalizes an injured employee’s right to recover from his employer in several ways, such as by eliminating contributory negligence and assumption of the risk defenses. One clause in it provides that “[a]ny contract, rule, regulation, or device whatsoever, the purpose or intent of which shall be to enable any common carrier to exempt itself from any liability created by this act, shall to that extent be void.” Congress enacted this provision in response to employers’ inserting clauses in contracts of employment that barred the employee from claiming any rights under FELA.
Today’s opinion tells us that one Aaron Cole worked for Norfolk Southern for 35 years. In 1996, concerned that he had been exposed to toxins including asbestos, he sued the employer, claiming that he had contracted pneumoconiosis and feared contracting other diseases, including lung cancer. Four years later, he and the employer entered into a settlement agreement in which he released the company from liability for all claims for lung-related diseases. In exchange, he received $20,000. He was 78 years old at the time.
Doctors diagnosed Cole with lung cancer in 2009; he died late the next year. His personal representative sued the railroad under FELA, relying on the language quoted above to evade the otherwise conclusive bar of the release. The trial court heard the railroad’s special plea of release; acknowledging that the Third and Sixth Circuits have split on the effect of this statute on releases like this, the court concluded that the release was effective, and dismissed the action.
The Supreme Court unanimously affirms today. The justices adopt the Third Circuit’s approach, which they call the “risk of harm” test. Here’s what that test entails:
[A] release does not violate [FELA] provided it is executed for valid consideration as part of a settlement, and the scope of the release is limited to those risks which are known to the parties at the time the release is signed. Claims relating to unknown risks do not constitute “controversies,” and may not be waived under § 5 of FELA.
Because the decedent had known in 2000 about the risk of future lung conditions, and indeed had pleaded fear of that very development, the release is valid and bars the wrongful-death claim here.
I have a confession to make. It would probably be best if I kept this to myself; but I have a duty of candor toward you, my faithful readers, so you need to know the shameful truth. As I was reading Kohl’s Department Stores, Inc. v. Department of Taxation, I repeatedly considered declaring “analysis bankruptcy” by simply declining to post anything on it. It’s packed, stuffed, loaded with truly arcane taxation and accounting stuff, and I have never held myself out as a tax jock. (I pay my taxes; I don’t care about anybody else’s.)
Bankruptcy seems to be a sensible option, the little voice inside my head whispered. After all, nobody’s holding a gun to your head, forcing you to post analysis. Just give ‘em a link and tell ‘em to go read it for themselves. But in the end, my sense of responsibility won out: If the justices have to suffer through this agony, I ought to man up and do it, too.
Kohl’s and the Department fought over about $2 million in this case, so for some tax lawyers, this isn’t uninteresting at all. The case relates to taxes that Kohl’s paid in 2009-10. Like other corporations, Kohl’s pays taxes on its taxable income. That reflects its gross receipts – the aggregate of what all its customers give the store in exchange for stuff – minus its costs of doing business. That includes components like labor, utilities, advertising expenses, and so forth. The result is taxable income, upon which the company calculates its annual tax bill for payment to Uncle Sam and Aunt Virginia.
The Kohl’s chain operates the stores, but a related company called Kohl’s Illinois owns intellectual-property rights like trademarks and licenses those rights to Kohl’s. Because this is a deduction from Kohl’s taxable income, Kohl’s excluded it from its gross income.
Kohl’s Illinois has no presence in Virginia and is hence beyond the reach of the tax man from Richmond. It declared the royalty revenue as income. But in paying taxes in various other states where it has to apportion its revenue, it didn’t have to account for a portion of those in every state, based on differences in tax schemes. That means that a substantial amount of this money isn’t being taxed anywhere, at least not on the state level.
In 2004, the General Assembly decided to close this loophole. Joining a number of other states who were addressing this missing-revenue problem, it passed an “add-back” statute that requires companies like Kohl’s to pay taxes on money it paid to related companies like Kohl’s Illinois, with one big exception: The company doesn’t have to add the money back if “the corresponding item of income received by the related member is subject to a tax … imposed by … another state.” Kohl’s claimed the exemption; the Department fussed; and that brings us to court.
On occasion, I note that certain opinions wind up getting assigned to particularly appropriate members of the court for opinion-writing duties. This is contrary to the popular belief that the assignment is truly random; I strongly suspect that some horse-trading goes on. In that vein, it should come as no surprise that the author of today’s majority opinion is Justice Mims. Why would he be the one to write about a 2004 tax statute? Well, what do you think he was doing that year? He was a member of the State Senate, that’s what. He accordingly is able to spice up his opinion with plenty of what passes in Virginia for legislative history, including the legislature’s desire to close this loophole and thereby grab an extra $34 million a year in tax revenue.
The majority concludes that using Kohl’s interpretation would frustrate this legislative purpose, allowing Kohl’s and other companies to shelter income by sending it to geographically favored related companies. The court also applies the Rule of Practical Construction, noting that courts generally defer to the interpretations of agencies charged with enforcing various Virginia laws. The court rules that the Department’s interpretation is correct, so Kohl’s has to pay the money.
Just not all of it. Kohl’s had made an alternative argument in the trial court, claiming that the Department’s calculation of a tax – assuming it was appropriate to tax at all – was incorrect. The trial court hadn’t ruled on that alternate argument, but the majority today picks it up and gives the store a partial victory, in the form of a remand for recalculation.
One quick side note: I’m quite surprised that the majority agreed to do that, since the trial judge never ruled on the alternative basis. In most contexts, the justices will not touch an issue that the trial court hasn’t decided. Examples of this are legion: for a couple of examples, see Lasley v. Hylton, 288 Va. 419, 428 n.3 (2014) and Orndorff v. Commonwealth, 271 Va. 486, 506 (2006).
The Department can find only four justices to climb on board with this ruling. Justice McClanahan dissents, and she’s joined by the chief justice and Justice Kelsey. The dissent notes that there’s no language in the statute to indicate that the General Assembly meant to tax the way the majority rules. More important, since there’s a legitimate ambiguity, the dissent would apply the rule that close calls go to the taxpayer. Justice McClanahan quotes an earlier ruling of the court that “Whenever there is a just doubt, that doubt should be resolved in favor of the taxpayer.”
Never let it be said that I didn’t man up when the circumstances required it.