ANALYSIS OF JULY 18, 2019 SUPREME COURT OPINIONS

(Posted July 18, 2019) They knew. Someone up there had to know. My schedule kept me out of my office this morning and half of the afternoon, and someone at Ninth and Franklin figured this would be a good day to hand down three published opinions, two published orders, and one unpub. They must have been chuckling at me this morning.

This means that I won’t be able to complete analysis of the decisions this evening; this will be a two-day job, bringing back memories of six opinion-stuffed days a year, before the Supreme Court moved to rolling release dates.

Real estate taxation

Back in the 90s, when I worked in City Hall, I handled a fair number of landowners’ challenges to their real-estate tax assessments. That gave me intimate familiarity with appraisal methods and the presumption in favor of validity of a locality’s assessment. The justices explore this field today in McKee Foods Co. v. Augusta County, involving taxation of a food-processing facility.

The building is a whopper – over 800,000 square feet located on 170 acres. When the County assessed it at roughly $30 million over a four-year period, and the County and the Board of Equalization refused to budge significantly, the owner sought relief in court. It contended that the true value of the building was more like $17 million.

In these proceedings, the taxpayer has the burden of proof, and that burden is stiff:

there shall be a presumption that the valuation determined by the assessor or as adjusted by the board of equalization is correct. The burden of proof shall be on the taxpayer to rebut such presumption and show by a preponderance of the evidence that the property in question is valued at more than its fair market value or that the assessment is not uniform in its application, and that it was not arrived at in accordance with generally accepted professional appraisal practices, procedures, rules and standards …

This means there’s now a two-step process: The owner first has to show either a valuation above fair-market value or one that isn’t uniform. If the owner achieves that, it next needs to show that the appraisal process deviated from applicable procedures and standards.

The County’s appraiser wasn’t a County employee; it hired a contractor to do the work. That contractor didn’t use any of the Big Three methods: sales comparison, depreciated reproduction cost, or income. Citing prior holdings, the justices today rule that when an assessment fails to use any of those three methods, that doesn’t make it automatically wrong, but it isn’t entitled to a presumption of correctness.

The trial judge, ruling in favor of the county, had employed that presumption to break what he felt was a tie in the evidence. The Supreme Court thus sends the matter back to the trial court for reconsideration without affording the County assessment any presumptive weight.

But there’s a catch. The trial judge who heard the voluminous evidence in this case – the trial-court record is well over 5,000 pages – is retired and isn’t subject to recall to sit as a judge designate. Part of the decisionmaker’s job is to weigh the competing appraisals and make credibility determinations, something that’s nearly impossible with a cold transcript. That leads to this remarkable coda to today’s opinion:

Accordingly, due to the unique circumstances of this case and the trial judge’s unavailability, we will remand this matter for a new trial, consistent with holdings expressed in this opinion. However, if the parties and the circuit court all agree to forego a new trial and have the circuit court review the existing record under the proper standard of review, our remand authorizes the circuit court to exercise its discretion whether to conduct a new trial or limit its review to the existing record.

These are unpalatable options, but that’s one of the risks of securing a reversal and remand for a new trial.

Workers’ Compensation

In the field of Comp law, Virginia adheres to the two-causes rule. That rule states that where there are two causes for a worker’s disability, and one is related to the employment while the other is not, the employee gets benefits if she shows that the employment contributed to the disability. That’s the backdrop for Carrington v. Aquatic Company.

The two causes here probably couldn’t be more dissimilar. The employee suffered from a kidney condition that initially didn’t prevent him from working. He later injured his arm on the job and received temporary total benefits. He had an operation and his doctors ultimately cleared him to return to light-duty work.

A that point, his kidney condition took a major turn for the worse, resulting in total disability. The employee asked for a continuing award of the temporary total benefits due to his arm, but the Comp Commission ruled that the employer wasn’t liable, since the sole cause of the total disability was the kidney condition, and that had nothing to do with the work. The Court of Appeals affirmed that ruling.

The justices today affix their stamp of approval on these holdings. The two-causes rule assumes that the two factors produce the same disabling condition. Here, the conditions were unrelated, and the arm injury had nothing to do with the employee’s inability to work.

Real property

The tony streets of Old Town Alexandria are the setting for Robinson v. Nordquist, a dispute between two neighbors over water damage. The owner of a corner lot sued her neighbors, claiming that their sprinkler system caused water damage to her home. She set out claims for nuisance and trespass; the neighbors demurred and filed a special plea of the statute of limitations.

The trial court considered the pleadings and ruled against the corner-lot owner and in favor of the neighbors. The water intrusion, according to the complaint, began after the neighbors installed a sprinkler system, and that installation came seven years before the corner owner filed suit. Since the statute is five years for property-damage claims, the suit came too late.

The Supreme Court today reverses and remands the case, holding that the corner owner is entitled to a jury trial on the limitations plea. The complaint alleged that “significant water intrusion and damage did not begin” until four-plus years before the filing of suit, and claimed that the intrusions were intermittent. With a continuous trespass, the statute begins to run immediately; but intermittent intrusions constitute separate causes of action. The Supreme Court concludes that the pleadings alone don’t establish when the damage began or whether it was intermittent. Those are factual disputes, so the corner owner gets a jury trial on the special plea.

Insurance

Two years ago, the Supreme Court resolved a dispute between two carriers over who had to pay what in a wrongful-death claim. Today, in Nationwide Mutual v. Erie Insurance Exchange, we learn that, in the words of the celebrated expert Miracle Max, the dispute was only mostly dead.

Nationwide had three separate million-dollar policies in place, while Erie had one for a million and one for five million. The trial court ruled that Nationwide’s three policies came first, so it was on the hook for the first $3 million; Erie’s coverage kicked in after that. In response to this ruling, Nationwide settled with the tort plaintiff for $2.9 million.

Nationwide then went to Richmond and got a reversal of the trial court’s allocation of coverage. The justices in 2017 ruled that one of the three Nationwide policies didn’t apply, and that each insurer had primary coverage of $1 million, with the companies sharing excess liability over that figure on a pro rata basis. This was a major win for Nationwide, but it proved elusive.

That’s because Erie refused to contribute, claiming that Nationwide had settled voluntarily without Erie’s consent. When Nationwide sued, the trial court agreed with Erie, holding Nationwide fully liable for its voluntary payment.

The justices, viewing this litigation for a second time, reverse for a second time. A majority of the court holds that when an insurer denies coverage, it waived the right to insist on a consent-to-settle provision in its policy. Since Erie had insisted in the first proceeding, and at all points up to the 2017 SCV reversal, that it owed nothing, its consent wasn’t needed for an equitable contribution order.

We don’t know which of the justices wrote today’s majority order, except it wasn’t Justices Goodwyn or Kelsey, because they dissent today. Justice Kelsey pens the minority opinion, arguing that contribution is only available for a voluntary settlement when the insurers are contemporaneously obligated. At the time Nationwide paid the settlement, Erie wasn’t obligated. It had a circuit-court judgment in its pocket, stating that Erie owed nothing. The dissent would find that distinction dispositive, and would leave Nationwide fully liable for its settlement payment.

Attorney discipline

Morrissey v. Virginia State Bar doesn’t reflect the first time that the Bar has disciplined Richmond attorney and politician Joseph Morrissey. Nor is it the second, or the third. Today’s published order refers to eight prior disciplinary actions. This is the ninth, and unless Morrissey seeks rehearing or eventual reinstatement, it should be the last.

Today’s order sets out two causes for this most recent set of charges. The first is Morrissey’s sending a young associate to court to participate in an agreed nolle prosequi of criminal charges. The associate had just passed the Bar exam but had not yet been admitted to practice by taking the required oath. (That admission happened two days after the nolle pros.) The second is his Alford plea to a charge of contributing to the delinquency of a minor. This stemmed from his having sexual relations with a juvenile employee in his office, then attempting to cover up or explain away the activity. (The juvenile is now an adult and is now Morrissey’s wife.)

The justices today affirm the ruling of a three-judge panel, which had revoked Morrissey’s license to practice law. The court approves the factual findings on each count and rules that three factors establish that revocation is appropriate. First, Morrissey refused to take responsibility for his violations, attempting instead to pass the blame on to others. Second, these actions occurred within a year after Morrissey regained his license after a previous revocation. And third, there’s what the order describes as “the long and notorious book of Morrissey’s disciplinary history,” reflecting his “chronic unwillingness to practice law in conformity with the rules that govern our profession.”