ANALYSIS OF SEPTEMBER 14, 2012 SUPREME COURT OPINIONS[Posted September 14, 2012] The Supreme Court’s 2012-13 term began on Monday, and today is opinion day for cases argued in the June session. The court today hands down 16 published opinions. I’ll post analysis of those decisions over the course of today and tomorrow.
The court decides three maritime cases today, the first of which is on rehearing. In John Crane, Inc. v. Hardick, originally decided in March, the court reinstates a $2 million award to a seaman’s estate for the seaman’s pain and suffering before his death, after a detailed analysis of how the Jones Act treats such pre-death claims. The court also reconsiders its earlier ruling that the appellant had not adequately assigned error in one assignment, and now agrees that the assignment was sufficient, in consideration of “the manner in which the case was tried.”
This latter ruling represents a small easing of the court’s recent trend toward finding procedural default, especially in civil cases. In March, the court had held that the appellant had failed to present argument in support of the precise wording of its assignment, but the court takes a more forgiving view of the issue today.
The next case is Hale v. Maersk Line Limited, in which a jury had returned a verdict in favor of a seaman for $20 million in compensatory damages and another $5 million in punitive damages. The seaman had been assaulted while in a port in South Korea; when he returned to his ship and reported the attack, the ship’s captain believed that he was lying and discharged him. The seaman claimed significant emotional damages, and the jury accepted that claim.
The shipowner moved to set the verdict aside and grant a new trial, but the trial court took a different course; it set aside the punitive damages and ordered remittitur of the compensatory award to $2 million. The seaman accepted the remitted award under protest, and both parties appealed.
Today, the Supreme Court unanimously hands a major victory to the shipowner. The court agrees that there was no basis for the award of punitive damages, and concludes that by allowing the jury to consider the punitive claim, the jury’s view of the rest of the case was likely affected. The court also agrees with the trial judge that the shipowner had a reasonable defense to the seaman’s claim, in that the information available to it, at the time it made the decision not to provide him with medical benefits, was an articulable basis to make that decision.
The court also agrees with the shipowner on the limitation of its potential liability on retrial (the case is remanded for a new trial on the seaman’s remaining claims), holding that the owner has no duty to protect a seaman who is on authorized shore leave. In this case, the seaman’s colleagues on the shore leave had conducted a brief but unavailing search for him; the court holds today that assuming arguendo that this search was inadequate, it can’t be imputed to the shipowner.
There’s an interesting procedural aspect of this case that might also signal a loosening of the court’s waiver approach. The shipowner moved, at the close of the evidence, to strike the seaman’s claims for maintenance and cure (a loose parallel to Workers’ Comp benefits for indemnity and medical benefits, respectively). The only ground cited for that motion was that the seaman had not proven over the course of the trial that he was unfit for duty, so he wasn’t entitled to benefits. Specifically, the shipowner argued to the trial judge that a seaman had to have medical evidence of unfitness.
The justices today rule that the trial judge should have granted a different motion – one that the shipowner did not make before the verdict. The court rules today that because the seaman didn’t have evidence of unfitness before the shipowner decided to deny the claim, the shipowner’s defense to the claim was reasonable. (Viewed in the light most favorable to the seaman, he did have some evidence of unfitness due to post-traumatic stress disorder, although that diagnosis came later.) The court thus rules that the trial judge correctly set aside the compensatory and punitive claims.
In making this ruling, the Supreme Court has done two things that will be very important to practitioners. First, for maritime lawyers, the court has indicated that it will require medical evidence of unfitness to support a claim for denial of maintenance and cure, and that evidence must be presented before the shipowner decides whether to pay or not. I don’t know whether this means that a shipowner can avoid damages liability by making a quick decision before an injured seaman can come up with a doctor’s note; time will tell on that one.
Second, and of more general interest to attorneys in all fields, the court has essentially ruled that a motion to strike will suffice to keep alive any issue for later motion, even on a ground that isn’t raised in the motion. Note that the justices agreed that the trial court should have granted a motion to strike, based on an issue (the reasonableness of the shipowner’s defense, as contrasted with a failure of proof on unfitness for duty) that the shipowner didn’t actually raise until after the verdict was in. In this case, the jury was instructed without objection on the compensatory and punitive damage claims, and in the past, such agreed instructions, combined with the failure to raise a particular objection before the jury retires, would conclusively consign the issue to the jury. This ruling signals that the justices may be a bit more forgiving of a lack of specificity in making objections. If my read on this issue is correct, this may be the most enduring impact of this appeal on Virginia jurisprudence.
The final maritime case, Omega Protein, Inc. v. Forrest, illustrates one of the fundamental principles of Jones Act liability. Like FELA jurisprudence, on which it’s based, a claimant doesn’t have to establish but-for causation, as is typical of most tort cases. An employer can be liable if its negligence contributed even in the slightest degree to the injury. Such liability is allocated by comparative fault, so a 51%-liable employer doesn’t have to pay 100% of the damages.
But this premise, which the court describes today (quoting cases from elsewhere) as the “featherweight” standard, still requires at least a feather’s weight. The issue in this case was whether the plaintiff possessed that feather.
The employee was injured when he jumped off a ship and onto a wharf; he fell and injured his back. He had sustained previous injuries, years earlier, to that part of his body.
Since this employee was seasonal (a commercial fisherman), his employer technically laid him off each winter and rehired him each spring. In doing that, it required a pre-employment X-ray of each employee to determine fitness for duty. Each employee was also required to certify in writing that he was fit to return to work; this employee did so, and an X-ray showed no problems.
The employee didn’t claim that the employer was negligent in causing the fall; his theory, instead, was that the employer shouldn’t have rehired him in the first place. He contended that if an MRI had been done instead of an X-ray (as this employer required elsewhere, but not in Virginia), it would have noticed that he wasn’t fit for duty. It was, accordingly, just a matter of time before he would have injured himself.
A jury returned a verdict in favor of the employee, and the trial court granted judgment on that verdict. Today, the Supreme Court reverses, since the employee never supported his contention by any actual testimony of what an MRI would have shown, if the employer had performed one. Essentially, the employee’s claim rested upon speculation as to what the MRI would have shown. The court therefore directs final judgment for the employer.
The court decides a pair of consolidated inverse-condemnation appeals today, under the lead case name Byler v. VEPCO. Two sets of property owners filed suit after VEPCO built an electrical transmission line adjacent to their property; they claimed that the lines rendered their developable property unusable for the highest and best use as residences. In effect, they contended, no one would want to buy a house that stood in the shadow of a 230 kV transmission line.
The trial court ruled against the homeowners, on the basis that the construction of the lines had not deprived the property of all viable economic use. Eminent-domain lawyers will recognize this as the test for a categorical taking, such as a downzoning or the restriction on all construction in Lucas v. SC Coastal Council. That isn’t the right standard, and the landowners’ attorneys must have been licking their chops when they got writs to review the dismissals of their cases.
Today’s opinion notes that VEPCO didn’t even attempt to defend the trial court’s reasoning; instead, it contended that the judgment was right for the wrong reason. It fell back on a contention that it had raised in both cases, that the landowners weren’t raising a claim based on an actual property right; they were merely arguing that the transmission lines made their property less desirable for a particular purpose. The justices seize upon this and affirm, even as they acknowledge that the categorical-taking analysis was incorrect.
The right-for-the-wrong-reason doctrine has gotten quite a bit of exercise lately. The court has described it, refined it, and applied it (or refused to do so) in published opinion on several occasions in the past few years. This decision underscores one of the predicates for applying the doctrine – the factual record must be sufficiently developed to put the justices in as good a position to evaluate the issue as the trial judge would have been.
Three decisions appear today to nourish procedure geeks. The first is McKinney v. Virginia Surgical Associates, and addresses again the difference between a cause of action and a right of action. Yes, the difference is minor, but no, you can’t ignore it.
A patient received medical case and filed a malpractice suit within two years. Several months later, he died, and his widow, who had qualified as his personal representative, moved to be substituted as a plaintiff, and to convert the suit into one for wrongful death. The trial court permitted that.
During discovery, the personal rep ascertained that she wouldn’t be able to prove that the medical negligence caused the death. She therefore nonsuited and brought a survival action within six months. The defendant convinced the trial court that the new case wasn’t the same cause of action, and the nonsuit statute only permits the filing of a new suit on the same cause of action; the statute isn’t tolled by a suit on a different claim. The court therefore dismissed the new suit, based on the passage of the statute of limitations.
The justices reverse in a short, unanimous opinion. The court points out that it has consistently defined a cause of action as a set of operative facts that may give rise to a right of action. If you keep in mind that cause of action is a set of facts, and right of action is the remedy provided for those facts, you can see where this is going to come out; the justices reverse and send the case back for trial. The cause of action here is medical negligence; that could have given rise to a right of action for survival or a right of action for wrongful death, depending on the causation factor.
In sum, a plaintiff’s earlier action tolls the statute if she’s suing based on the same facts. The fact that she seeks different remedies for those facts won’t work against her.
Next, we get the court’s views on whether a voluntary dismissal under Fed.R.Civ.P. 41(a) is a nonsuit, for the purposes of Virginia’s nonsuit statute. The case is INOVA Health Care Services v. Kebaish.
Despite the fact that the appellant is a hospital, this isn’t a med-mal case. Kebaish is a doctor who sued the hospital and a host of individuals on numerous theories, including defamation, tortious interference, and conspiracy. Since some of the defendants were in the military and acting within the scope of their duties, the case got removed to federal court. While there, the plaintiff obtained leave to amend. He did so, but before the defendants could answer, he filed a notice of dismissal of his action under Rule 41(a).
Shortly thereafter, he refiled his suit, again in state court, against the hospital only; he later added back some of the original individual defendants (but not the military officers). That case went to trial, but on Day 2, the plaintiff notified the court that it was going to nonsuit. The defendants cried foul, claiming that the federal dismissal was actually a first nonsuit, and they objected to a second one.
The defendants relied upon some dicta in a 2001 decision, where the SCV had stated that a voluntary dismissal under Rule 41(a) in federal court is equivalent to a nonsuit under Virginia law. That sounds quite plausible, but the trial court wasn’t buying it; the court permitted the nonsuit.
Now, ordinarily you can’t appeal a case that’s terminated by nonsuit, since the matter remains unresolved. But where, as here, there’s an issue about whether the nonsuit was properly granted, an appeal is permitted. The justices granted a writ to settle a question that has nagged at trial lawyers for some time.
The court today affirms, holding that despite its 2001 dicta, there really is a difference between a notice of dismissal and a nonsuit. The notice is very, very limited, in that it must be filed at the very outset of the case; in contrast, a nonsuit is available up to and even during trial on the merits. The court finds that this difference is significant, and holds that only a good ol’ Virginia nonsuit will serve as a “first nonsuit” for the purposes of the statute.
There’s one issue that doesn’t arise today: the different between a notice of dismissal under Rule 41(a)(1)(A)(i) and a stipulation of dismissal under Rule 41(a)(1)(A)(ii). A stipulation can indeed be filed at trial, but unlike a nonsuit, it has to be endorsed by all parties who have appeared. If the defendants don’t consent, the case goes on. It is thus a far less effective procedural tool for plaintiffs. The court doesn’t decide today whether a stipulation would stand as a first nonsuit; my best guess is that it would not, because of the precise procedural difference that I describe in this paragraph.
The third civil-procedure decision of the day is Virginia Tech v. Prosper Financial, Inc. The school and Prosper were parties to a research contract. The contract listed a physical address for Prosper in Coral Gables, Florida, but directed that notices be sent to a PO Box in Miami. Tech routinely corresponded with Prosper by sending things to the PO Box.
When the school filed suit for breach of the contract, it evidently ascertained that Prosper didn’t have a Virginia registered agent. It therefore served the Secretary of the Commonwealth, and listed the PO Box only as the company’s last known address. The Secretary duly sent the process to the PO Box. Prosper didn’t appear to defend, so the school got a deep-six-figure default judgment in mid-2010.
The next year, Prosper popped up and filed a motion to vacate the default judgment under Code §8.01-428. It also filed a companion independent action, as referenced in that statute, asking for the same relief. The grounds for the relief were that the school should have given the Secretary both the PO Box and the physical address; the company asserted that the failure to do so was a fraud or a fraud on the court. The trial judge agreed with the company and reopened the case, though he didn’t say whether he was doing so pursuant to the motion or the independent action. He also didn’t make detailed findings, even stating at one point, “[w]hether it’s void or not, I don’t know.”
Now, at this point, if the court’s action is based on the 8.01-428 motion, you don’t have a final, appealable order, and the case will have to go to trial. But the school’s lawyers were smart enough to appeal the independent action, since in that case, the court had given all of the relief requested in the case. The justices granted a writ, and today, they reverse and enter final judgment for the school. In doing so, the court finds nothing contrary to Virginia law, or to due process, in the decision to give only the PO Box to the Secretary. That address had worked just fine for routine correspondence, so it was reasonably calculated to provide the company with notice of the pending suit. The trial court thus erred in holding that two addresses should have been given.
The court also addresses the factual findings that are necessary for a court to reopen a case. Precedent established that a defendant seeking to reopen a judgment through an independent action must establish five things, and if the trial court elects to grant that motion, it must set forth “its consideration of and findings with regard to all the necessary elements.” This court didn’t come close to doing that, so the grounds stated for the relief don’t exist in the record.
This last point is a cautionary tale for defense lawyers seeking relief in this way. It isn’t enough for the court to grant you the relief you want; you must ensure that the court sets out its reasoning. If a judge sends you a one-line opinion letter granting your motion, you have a duty, in order to hold onto that ruling, to remind the judge of this holding and ask him to set out his findings in detail. If you fail to do that, your victory will have a short shelf life.
By the way, if any civil-procedure geeks out there are offended by my use of that term above, please be assured that I use it lovingly, as I’m one of you.
Last year, I reported on the unusual spectacle of a hotly disputed 11-0 ruling from the en banc Court of Appeals. All of the judges in that court voted to affirm a conviction for a sexual assault, but they differed sharply over the line of analysis to get there. Today, in Foltz v. Commonwealth, a unanimous Supreme Court takes up the issue.
I reported on this case after the en banc opinion; you can see my analysis here. The primary issue is whether the placement of a GPS unit on the car of a suspected assailant was a Fourth Amendment violation. The en banc majority felt that the case could be affirmed without resort to the constitutional aspect of the case.
While the case was on appeal to the Supreme Court, that other Supreme Court (the one just across the Potomac) handed down US v. Jones, 132 S.Ct. 945 (2012). The high court rule that the placement of a GPS unit on a car was a “classic trespassory search.” That must have given Foltz considerable encouragement as his lawyers prepared for oral argument in Richmond.
But today, the Virginia court affirms even after it assumes that the GPS placement was a Fourth Amendment violation, finding that any such violation was harmless error. The court points out, quite plausibly, that the police officers actually saw Foltz in the act of attacking a victim. The victim herself also testified in detail about the attack, so the officers’ testimony was cumulative of hers.
Virginia law is fairly flexible in allowing a criminal defendant to change his mind on entering a guilty plea; the entry of such a plea doesn’t bar him from asking to withdraw that and insist upon trial. Last year, in Bottoms v. Commonwealth, the justices reversed a conviction where the defendant had asked to change his plea, after it was accepted but before sentencing. Today, in Johnson, Director v. Anis, the court takes up the next step in the process – what happens when the request comes after sentencing?
Anis got what looks like a great deal from the prosecutor in his grand-larceny case – an agreement to drop a companion vandalism charge, and time served on the larceny charge, in exchange for an Alford plea. He agreed to sign on the dotted line, an during the colloquy, when asked if he was satisfied with his lawyer, responded, “I think he’s been about the best attorney I probably could have had.”
But before the defense lawyer could even paste that wonderful endorsement on his firm’s website, Anis had a change of heart. He wanted to plead not guilty and go to trial, despite the fact that he had apparently been caught red-handed by the owner of the property he was trying to steal. A judge denied his lawyer’s hastily drafted motion (Anis’s change of heart must have occurred just before the 21st day) to withdraw the plea.
Experienced criminal-law practitioners know what’s coming next; Anis filed a habeas petition, asserting that the wonderful attorney had in fact been ineffective. Interestingly, the motion criticized the attorney not for the initial advice to plead guilty, but for failing to include enough detail in the post-sentencing motion. The trial court eventually granted the writ, finding that the lawyer should have added several specifics to the motion.
The justices reverse, noting that a statute governs withdrawals of pleas after sentencing. That statute authorizes post-sentencing withdrawals only “to correct manifest injustice.” Today’s opinion cites Black’s Law Dictionary, defining manifest as basically meaning “so obvious as not to require any proof.”
The court thereafter predictably rules that, given the overwhelming evidence against Anis, there was no manifest injustice in refusing his motion. Criminal defendants can liberally change their minds about pleas before sentencing, but once sentence is pronounced, the calculus turns dramatically in the other direction.
Separation of powers
Two combined cases are decided today under the caption of Gallagher v. Commonwealth. The cases involve petitions by convicted felons to restore their rights to possess firearms. Both petitioners had had their political disabilities, excepting those relating to firearms, restored by the Governor of Virginia, and both petitioned circuit courts to restore the firearm rights.
The Code contains a provision that allows the governor to restore rights other than those relating to firearms, and permits circuit courts to restore those rights once the Governor has restored the others. In both of these cases, trial courts had ruled that they had no jurisdiction to make such restorations where the Governor had not done so.
If that sounds like flawed reasoning, you’re onto the analysis of today’s decision. In fact, the trial courts’ authority to entertain these petitions is so clear that the Attorney General confessed error in both cases and asked the justices to reverse and remand for a merits evaluation of the petitions. The justices accept this invitation in both cases after Senior Justice Russell’s exploration of Virginia legal history regarding the division of responsibilities between the Governor, the legislature, and the courts. This opinion isn’t likely to be cited very often in Virginia courts, but it does make for interesting reading for those of us with a historical bent.
I began to read Tuttle v. Webb with considerable trepidation. The issues relate to a surviving spouse’s elective share of a decedent’s augmented estate. I’ll tell you right now that this is well out of my field of expertise; I barely know how to spell some of the words I just typed in the previous sentence. (Okay; I exaggerate slightly. But I definitely don’t swim in this pool very often.) Fortunately, the chief justice’s explanation of the facts, law, and legal dispute is clear enough even for challenged spellers to follow along.
Husband and Wife sold some land in 2005 and plopped $118,000 into a joint account. They paid down some debts, leaving about $83,000. Husband then wrote two checks, each for half of what was left in the account; one check was payable to Wife and the other to himself. Husband basically left his money in the account (he never cashed the check), but Wife converted her half into two cashier’s checks of about $21,000 apiece. She then gave those to her son from a previous marriage, Henry.
The happy couple lived in a home in Farmville. Wife owned it, having received it as a gift from her mother. She borrowed $50,000 and secured that debt by a mortgage against the property. While she was the only signatory to the deed of trust, both Husband and Wife signed the underlying note as co-obligors. They used half of the proceeds to perform repairs on the house, and Husband deposited the other $50K in his account.
Wife died in 2010, survived by Husband, Henry, and two adopted kids. Her will cut Husband and the adopted children off entirely; she left everything to Henry. Husband filed a claim for an elective share of one-third of the augmented estate. This litigation ensued to resolve how much that share would be.
The trial court made two rulings that sent Husband scurrying off to Richmond. First, it held that Husband had consented to Wife’s delivery of the two $21,000 checks to Henry, so those funds wouldn’t be considered in her augmented estate. Second, it found the spouses jointly responsible for the $25,000 used to repair the house, but Husband had to account for the other $25,000. That left him with the princely sum of $2,500 as his elective share.
Now you know why he went to Richmond. Today, the justices reverse both of those rulings. Under Virginia law, a person can’t cut off his or her spouse by the expedient of giving money away; if he or she tries to do that, the amount of the “gift” is added back into the augmented estate for the purpose of calculating it. (Wife didn’t receive anything of value from Henry in exchange for the money.) Henry argued that Husband had agreed to the “gift” when he cut a check to Wife, but the court rules that this $42,000 check didn’t diminish Wife’s estate at all. The two smaller checks did, but Husband never consented to that transfer.
On the mortgage, the court notes that Husband and Wife were jointly liable for the entire amount so it was error to charge Husband with ¾ of it. The case is remanded for further proceedings, basically to carry out the recalculations as directed by the Supreme Court. The amount at issue isn’t exactly a princely sum, but Husband clearly comes out ahead of where he was before today.
Neighbor disputes. Hate ‘em. But my personal distaste doesn’t stop neighbors from suing one another. In Kurpiel v. Hicks, we get a fight over rechanneled stormwater. The Hickses performed landscaping and other work on their property that led the Kurpiels to sue them, initially asking for a declaratory judgment and then (after a demurrer was sustained) in trespass. The trial court sustained a demurrer to the amended pleading and dismissed the case with prejudice.
The justices breathe new life into the litigation today, holding that the Kurpiels’ allegations were sufficient to state a claim. They had alleged that runoff from the Hickses’ land was due to careless and unnecessary actions. The trial court had relied upon the “common enemy” doctrine, holding that water affects us all, and each landowner is free to fend it off as best he can. The justices recognize that this is the law, but they note an important caveat to that principle: “provided he does so reasonably and in good faith and not wantonly, unnecessarily or carelessly.” The Kurpiels had matched their allegations to the requirements of this exception, so the trial court was wrong to strike their claim.
I always strive to make these reports interesting, so you’ll want to come back. I recognize that these analyses can be useful, and reading these summaries is a lot faster than reading all of the slip opinions yourself. But I don’t want this website to be the broccoli-and-fiber of your legal career; I prefer to hold your interest if I can. Hence the “hook” for my discussion of Dewberry & Davis, Inc. v. C3NS, Inc. is one of the sexiest two-word phrases in our profession: attorneys’ fees.
Now that I have your undivided, nay, rapt attention, here’s what happened. The owners of some land in Louisa County hired an engineering firm to prepare a site plan in preparation for the construction of an industrial building. The engineers got some bad information from a local utility company, so they depicted the building in the wrong location, per the contract. The owners received an aerial photo that could have corrected the mistake in time, but they didn’t recognize the significance of the picture, so they didn’t pass the photo on to the engineers.
When the owners eventually discovered that the building was in the wrong place, they withheld part of the contracted engineering fees. The engineers sued to get their money; the owners countersued for breach of contract. Today’s opinion doesn’t say how much the engineers claimed, but it’s clear that that sum was dwarfed by the $1.5 million counterclaim.
The case proceeded to a bench trial that lasted nine days. The trial court found that the owners were the first party to breach the contract, by failing to hand over the photo, as they were required to do with all relevant information about the site. The court thus entered judgment in favor of the engineers on their claim, in the amount of $50,000, and dismissed the huge counterclaim.
The parties had agreed in writing to bifurcate their respective attorneys’ fee claims until they found out who won on the merits. As you probably know, a fee claim must be presented in your case in chief, or it’s considered waived (Lee v. Mulford, 2005); but the parties may agree to postpone fee litigation until after the merits have been determined (West Sq. v. Communications Tech, 2007). The fee-shifting provision in the contract was, at least in my view, ponderously worded; but basically it required the loser to pay the winner’s fees.
The trial judge awarded the engineers $18,000 for winning their claim, and all of one dollar for their successful defense of the $1.5 million counterclaim. This came as something of a disappointment to the engineers, who had hoped for something a little closer to $338,000, the amount of their fee claim. The judge reasoned that a whopper of a fee award like that would be improper, because the engineers really only won the counterclaim on a technicality (to the extent you can classify the first-breach doctrine as a technicality). The court noted that the engineers had also breached the contract; they just weren’t the first ones to do so.
There are several issues in the opinion that’s handed down today, but the primary one is the trial court’s decision to award only nominal fees under these circumstances. In terms that I found remarkably stark, the Supreme Court reverses, finding the trial court’s decision to be “plainly wrong.” The justices unanimously rule that a mandatory fee-shifting provision like this one doesn’t allow for shading the fee award based on perceived equities. The owners didn’t contend that the claimed hourly fees were excessive, or that the number of hours claimed was improper. That means that the engineers were entitled to more than a single greenback for their defense efforts.
In other rulings, the court rejects the owners’ contention, raised in cross-error, that the engineers were entitled to only one fee award in the case, and that was limited to 25% of the amount they recovered. Today’s opinion notes that the counterclaim was far more important in terms of the trial than was the original claim for engineering fees.
There’s an important component of this decision that will interest attorneys who litigate fee claims. The court has previously held that a successful party can’t recover a fee award for unsuccessful claims; you can only get fees for those claims on which you win. (Ulloa v. QSP, 2006). The owners asked the Supreme Court not to permit fee claims for certain pretrial motions (such as a motion to compel discovery responses) filed by the engineers, on which the owner prevailed. That is, the court denied the engineers’ motion to compel, but after trial, the engineers won on the merits of their claim.
The Supreme Court declines to expand the Ulloa rule this far. Even if a given motion is unsuccessful, if it was prosecuted in the course of a claim on which the litigant was ultimately successful, the court can make a fee award for that time.
The opinion concludes with a three-word phrase that’s even sexier than the two-word phrase highlighted above. The case is remanded for a calculation of a reasonable fee award for the engineers, including appellate attorneys’ fees. Now we’ve gone from broccoli and fiber all the way to a butterscotch sundae.
I began publishing this website in January 2005. Today’s is the 47th SCV opinion day that I’ve covered, and today I’ve seen something that I haven’t seen in the previous 46: In Preferred Systems Solutions v. GP Consulting, the Supreme Court refuses to canopener a covenant not to compete.
To be fair, there has been one case in which the justices did not rule that the covenant was unenforceable – it’s none other than the Ulloa case described above. But that case comes with an asterisk, because the issue of the enforceability of the covenant was not in issue on appeal; Ulloa was all about attorney’s fees. In literally every appeal over the past 7½ years in which the litigants have actually argued over the enforceability of a covenant, the justices have struck it down.
Until today. Now, when you read about this covenant, you’ll see why. First, this was a covenant executed by a company, not an individual; this lessens somewhat the anticompetitive nature of the covenant, because with an individual, you’re talking about restricting his ability to earn a livelihood. Second, the covenant was narrowly drawn, to the point that it prohibited work on only one government project, and prohibited work with fewer than ten contractors. The opinion states that there were literally hundreds of other jobs in exactly this sector (information technology), using exactly this operating system, in the geographic region, to which this covenant didn’t reach. Finally, the covenantor essentially thumbed its nose at the covenant, giving two weeks’ notice and then going to work for a prohibited company all of three days later.
Today’s opinion is a very useful exposition of proving damages in a commercial case alleging lost profits. The court also affirms the trial court’s refusal to add injunctive relief to the final order, reasoning that an award of monetary damages for the breach of contract afforded sufficient relief. (It’s worth remembering that in the phrase irreparable harm, the adjective relates to how well the harm can be addressed by an award of money damages. If those damages are appropriate, then the harm is, in this context, reparable.)
There’s an important ruling regarding the covenantee’s unsuccessful claim for tortious interference with a contract expectancy. That claim requires, among other things, the use of improper means. The only thing that the covenantee identified as being improper was the breach of the covenant, and today the Supreme Court holds that that, by itself, isn’t enough:
Improper methods or means generally involve violence, threats or intimidation, bribery, unfounded litigation, fraud, misrepresentation or deceit, defamation, duress, undue influence, misuse of inside or confidential information, breach of a fiduciary relationship, violation of an established standard of a trade or profession, unethical conduct, sharp dealing, overreaching, or unfair competition.
Simply breaching a promise, even egregiously, as here, will not suffice to support a tortious-interference claim. Justice McClanahan writes a short concurrence on this point, agreeing with the conclusion, but spelling out in detail the basis for it. She reasons that when a duty arises only by virtue of contract, breaching that duty alone isn’t a tortious means of interfering. Only a breach of a common-law duty will suffice for that purpose.
The court finally affirms the dismissal of a trade-secret claim, ruling that the allegations in the complaint were too conclusory to survive a demurrer. Today’s opinion doesn’t state whether the plaintiff requested or the trial court refused leave to amend; in this instance, a bit more detail might have kept the claim alive, but we don’t have enough information to know that.