ANALYSIS OF DECEMBER 20, 2018 SUPREME COURT OPINIONS

(Posted December 20, 2018) That late Christmas shopping you were planning to do is going to have to wait; we’ve got opinions! For the third straight week, the justices hand down five sets of early Christmas presents – at least for the winning parties. From the other perspective, it’s five lumps of coal.

One side note: The justices have been clearing their desks at a remarkable pace. Everything argued this year before the November session has been decided, and they’ve handed down rulings in well over half of the November cases already.

Pleadings

Another lawyer gets caught in a familiar pleading trap in Ray v. Ready. It’s an action by a widow to claim an elective share of her deceased husband’s estate. His will made no provisions for her, so she sued claim what the statute says is rightfully hers.

Except she didn’t sue the husband’s personal representative; her action was unfortunately styled, Widow v. Estate of Husband. On a number of occasions, the justices have held that a suit against an estate is a nullity; litigants have to be persons (including corporate “persons”), and you can’t correct that under the misnomer statute.

But there’s a twist here: After the most recent pleading misstep, Estate of James v. Peyton in 2009, the legislature decided to smooth the playing field. It amended the Code to provide a safe harbor, allowing amendment where a pleading improperly identifies a fiduciary or personal rep, and directing that such an amendment relates back to the original filing date.

That would seem to cure this problem, but the justices hand the unfortunate plaintiff’s lawyer today’s first lump of coal. The lawsuit never mentions the personal rep at any point. That means that the only available approach to curing this legal nullity is to file another action with the proper party name. And in this case, it’s too late to do that, as the statute of limitations had run.

The Supreme Court thus affirms the trial court’s dismissal of the action with prejudice.

Criminal law

Virginia’s drug-distribution laws contain some fairly stiff minimum sentences in some cases. But the General Assembly is not without a heart; it built into the Code a provision that allows some defendants, under narrowly defined circumstances, to avoid those minimums. One of the requirements is in issue today in Hall v. Commonwealth:

Not later than the time of the sentencing hearing, the person has truthfully provided to the Commonwealth all information and evidence the person has concerning the offense or offenses that were part of the same course of conduct or of a common scheme or plan …

After a guilty plea, a trial court set a sentencing hearing for 9:00 a.m. on a given court date. When Hall and his lawyer showed up a bit before 9 that day, the lawyer filed a motion for relief from the minimum sentence. Attached to the motion was a two-page handwritten disclosure of what Hall knew about the matter.

The prosecutor received the motion and the disclosure a few minutes before the court took the bench. When the judge considered the motion before proceeding with the sentencing hearing, the prosecutor objected that a literally last-minute filing didn’t suffice, because it didn’t allow the prosecutor or the court to evaluate the information to determine its truth and sufficiency.

This made sense to the judge, who declined even to read the submission, finding it untimely. The court proceeded to hit Hall with the mandatory minimum sentence, and the Court of Appeals affirmed that.

Today the Supreme Court reverses and remands the case for resentencing. The record shows that Hall filed his narrative “not later than the time of the sentencing hearing.” The statute doesn’t say “x days before the hearing” or “a sufficient time before the hearing to allow evaluation,” and the courts aren’t free to insert that language by way of construction. The justices reject an argument that allowing these last-minute filings would result in an absurdity, noting that that’s the interpretation in several federal appellate courts, and the skies aren’t falling in those cases.

This early Christmas gift comes with a word of caution for Hall and those similarly situated. A trial court is permitted to weigh the late filing time in deciding whether the disclosure really is full and truthful. It’s possible that the sentencing judge might so rule on remand. But his or her prior approach was to reject the statement without even reading it.

Real property

I humbly predict that lawyers handling foreclosures are going to suck wind when they read Crosby v. ALG, Trustee, LLC. A borrower sued to rescind a foreclosure sale on property he owned in Albemarle County, naming as defendants the substitute trustee, the foreclosure purchasers, and Fannie Mae. While the suit was pending, he reached an agreement with the defendants to repurchase the property. He then settled with Fannie and the buyers, and obtained leave to amend his complaint to seek money damages from the trustee for what he saw as an improper foreclosure.

The amended complaint asserted a claim for breach of fiduciary duty. The borrower contended that the trustee sold the property for an unconscionably low price, far below its obvious value, and that it did so after only the bare minimum advertising of the sale. It also alleged suspicious circumstances – the only two bidders in that day’s series of auction sales submitted a joint bid for this property at roughly 5% of its assessed value. The trial court sustained the trustee’s demurrer and dismissed the case.

Today a divided Supreme Court reverses and remands the case. Justice Powell writes for a five-member majority, and she concludes that the amendment stated a viable claim. The trustee is, contrary to the trial court’s finding, a fiduciary for both parties in a foreclosure – both borrower and lender. The trustee’s fiduciary duties are not limited by the terms of the deed of trust; they include common-law duties as well. The majority finds that the borrower properly alleged that “the foreclosure sale overwhelmingly benefited the creditor at the debtor’s expense and there was a significant discrepancy between the sales price and the value of the property,” thus stating a claim.

Justice Mims, joined by Justice Goodwyn, dissents on the key holding in this appeal. He notes that the deed of trust defines what a trustee must and may do, and the trustee here did exactly what that document directed:

Crosby alleged that ALG sold the property at auction after advertising it only twice—but he agreed in the deed of trust that the trustee could sell the property after advertising it that many times. He alleged that ALG sold the property to the highest bidder at the auction—but he agreed in the deed of trust that it could. In fact, he agreed that it shall. Thus, ALG did exactly what the parties to the deed of trust agreed that the trustee would do: advertise that the property would be sold at auction, and sell the property to the highest bidder there.

The dissent points out that neither the borrower nor today’s majority can identify what provision the trustee violated. It warns that today’s ruling “makes the trustee under a deed of trust a guarantor by implication of the price that a foreclosed property sells for at auction,” a warning that will shake the confidence of even the most ethical of trustees.

I find the majority’s conclusion problematic. As the dissent points out, the trustee here did just what the deed of trust expressly authorized and directed. Future trustees, mindful of this opinion, may perhaps choose to advertise more often than the deed of trust specifies, to give added assurance that they won’t face this kind of lawsuit. But how much is enough? Once you implicitly require more than the parties’ contract specifies, without explaining exactly what will suffice to insulate the trustee from liability, you require those trustees to guess in what should be a bright-line area.

Evidence

There are two primary issues in Shumate v. Mitchell, but one of them proves far more controversial than the other. This is a tort case stemming from a rear-end collision. As sometimes happens with these things, the collision was either a fearsome crash or a minor fender-bender, depending on who’s describing it to you.

After the collision, the defendant dies of unrelated causes, so his personal rep became the defendant. The defense admitted liability, and the parties tried the case to a jury on damages. The verdict came back in favor of the plaintiff, of course, but the jury fixed damages at zero.

The plaintiff got a writ on two issues. One is almost anticlimactic: The court rules that a verdict of zero is perfectly permissible here. The plaintiff had a long history of prior complaints due to three previous accidents. The defense called a doctor who testified that the plaintiff’s complaints came from those earlier traumas, not this one. And there was minimal damage to the two cars, so the jury might have found that there was nothing to award here.

By far the more interesting issue – at least from my perspective – is a debate over the application of the Dead Man’s Act. The personal rep called the decedent’s son to tell the jury how his father had described the accident – a low-speed bump. The trial court admitted that testimony, and today the justices affirm that ruling (and the zero-dollar judgment).

Justice Mims’s opinion for a unanimous court explores the history and development of the Act. He cites Prof. Kent Sinclair’s clear criticism of the current wording of our Act, calling it unique among American law and a “sweeping abolition of hearsay principles.” The justice implicitly embraces this criticism with this passage:

Shumate’s collection of misgivings on brief—that unless we adopt her interpretation of the statute, “the party asserting the Dead Man’s Rule could bring in a plethora of out of court, unreliable hearsay of what the decedent said to others to bolster unfairly the decedent’s case”—is actually an accurate statement of the statute.”

Well, now. If it really is such a problem child, why doesn’t the court just overrule it? Because it’s a statute; that’s why. The court can’t just jettison statutes that it doesn’t like. Things like that are up to the legislature. Perhaps the General Assembly will take the hint.

Will contests

It’s a poorly kept secret that in general, I tend to read and analyze opinions from shortest to longest, thus allowing me to post analysis as quickly as possible. It will thus come as no surprise that the last case of the day, using my protocol, is the chief justice’s opinion in Parson v. Miller, involving litigation between cousins over a decedent’s will. Even so, at just 21 pages, this isn’t exactly burdensome reading.

This is an opinion about presumptions. There are two kinds: a Thayer presumption evaporates as soon as the opponent adduces evidence against it, while a Morgan presumption endures even after it is rebutted. The Thayer variety shifts only the burden of going forward with the evidence, while the Morgan shifts the burden of persuasion. With Thayer presumptions, the burden of proof always remains with the person who bears that burden initially; it never shifts.

Virginia employs both types, in varying contexts. In will contests involving claims of undue influence, the Supreme Court has made it clear that we use the Thayer approach. In this appeal, the contestant pleaded and proved the three elements that trigger the presumption:

(1) the testator was old when his will was established; (2) he named a beneficiary who stood in a relationship of confidence or dependence; and (3) he previously had expressed an intention to make a contrary disposition of his property.

The plaintiff, the 80-year-old testator’s daughter, found herself cut out of a will that her father executed a week before his death. The new beneficiary was her cousin, the testator’s niece, who had cared for him in his last few months of life, through a period of declining health. The testator had previously assured his daughter that she was getting everything.

If you’re keeping score, that’s 3-for-3, so the trial court decided that the presumption applied. The niece adduced competent evidence to rebut the presumption. The court denied a motion to strike and decided to let the jury decide whether the presumption was rebutted and whether the daughter had met her ultimate burden of proof. The jury sided with the daughter, and the trial court refused to set that verdict aside.

The justices do, though. They rule today that when the niece properly rebutted the presumption, the burden remained on the daughter to prove that the testator’s will was overborne. She never could do that; at trial, when asked what the niece had done to gain control over the testator, she could only shrug: “I don’t know.”

The court today rules that the trial court should have granted a motion to strike at the close of all the evidence. The jury only gets these questions if there’s evidence showing “manifest irresistible coercion which controls and directs the testator’s actions.” The Supreme Court unanimously reverses and remands for the trial court to enter judgment for the niece.