ANALYSIS OF SEPTEMBER 16, 2011 SUPREME COURT OPINIONS[Posted September 16, 2011] The Supreme Court’s first opinion day of the new term brings us 14 published opinions in cases argued earlier this year. Perhaps the most newsworthy decision of the day is the court’s decision on the actual-innocence petition filed by Dustin Turner. The Court of Appeals had rejected that petition last year, and today the justices affirm that ruling.
I’ll post analysis of today’s rulings throughout today and tomorrow.
In a case that has been widely reported and analyzed in the Tidewater media, Navy SEAL trainee Dustin Turner was convicted of murder for his role in the 1995 killing of a woman here in Virginia Beach. After his conviction, one of his co-defendants recanted his testimony, claiming that he acted alone in killing the victim, and that Turner played no part in the crime. Turner filed a petition for a writ of actual innocence, and that proceeding reaches the end of the line today in Turner v. Commonwealth.
I’ve described the circumstances of this case in a couple of previous posts (available here and here), so I won’t go over everything in detail today. The Supreme Court unanimously affirms the refusal of the petition because evidence, to be considered in these proceedings, must be material. The petition cites the actual murderer’s statements that he acted alone in strangling the victim, but that evidence never addresses the question of whether Turner participated in the underlying abduction with intent to defile. That abduction was part of the felony-murder prosecution of Turner, and once the victim was killed, it didn’t matter who did the strangling or whether Turner had an opportunity to try to save her. Once you get involved in a joint criminal act, you’re at risk of prosecution for whatever happens, even if the primary perpetrator is someone else.
I referred above to this as the end of the line, and that appears to be a safe description. Since this is an issue of Virginia law (petitions for writs of actual innocence are creatures of Virginia statute), I don’t see any federal issues that would entitle Turner to seek further review in Washington. At this point, his only possible source of succor is the Governor’s office, and I’ll venture a guess that that avenue probably won’t help him.
The Tort Claims Act is a limited waiver of the Commonwealth’s sovereign immunity from tort liability. It applies to, among other things, claims arising out of the actions of state employees. In Doud v. Commonwealth, we find out today whether that includes employees of constitutional officers.
Doud is the administratrix of the estate of a prisoner named Proffitt, who was convicted of “a felony sexual offense involving a minor” (today’s opinion doesn’t specify what the exact offense was) and sent off to prison. Before he could be transferred to the prison system, he was attacked in the local jail by other inmates and severely injured.
Doud’s personal representative sued various persons and entities, arguing that deputy sheriffs knew that Proffitt was at risk of being attacked by other inmates because of the nature of his conviction. She eventually nonsuited everyone except the Commonwealth. The trial court sustained a plea of sovereign immunity, ruling that the Tort Claims Act didn’t apply to employees of constitutional officers such as the sheriff.
Today’s short opinion notes that the Act is in derogation of the state’s common-law immunity, so it’s narrowly construed. From there, the court goes on to interpret the language of the statute and find that employees of constitutional officers are not covered, because the officers are not “the Commonwealth.” Constitutional officers are independent of either state or local government. Neither the state nor a locality can control the actions of its officers; only the voters can do so, on Election Day. Accordingly, the trial court correctly ruled that the Commonwealth couldn’t be sued for the actions of a deputy sheriff.
Today’s opinion contains one important reminder – where a plaintiff’s claim is barred by sovereign immunity, the trial courts don’t even have jurisdiction to entertain the suit.
The court today hands down what is, to my knowledge, the first appellate opinion in America to decide whether property-damage claims allegedly traceable to global warming are covered by standard commercial general liability policies. The case is The AES Corporation v. Steadfast Insurance.
AES is a Virginia-based company that owns energy-generating businesses. Along with 23 other companies, it was sued for the attention-getting sum of $400 million in a federal court in California by a village in remote northwest Alaska. The action claimed that the village, located on a barrier island on the Arctic Ocean, had sustained major damage due to erosion, and that the erosion was proximately caused by a long chain of events that were traceable to global-warming effects of the 24 defendants’ business activities.
AES tendered the suit to its insurer, which issued a reservation-of-rights letter and eventually filed a declaratory-judgment action here in Virginia, seeking a ruling that it had no duty to defend. Since the Alaska suit alleged that the defendants (including AES) knowingly carried out activities that caused global warming, the insurer contended that there was no “occurrence” under the terms of the policy. That’s because the policy defines an occurrence as “an accident, including continuous or repeated exposure to substantially the same general harmful condition.” The insurer contended that, as alleged in the Alaska suit, the global warming (and concomitant erosion) was not accidental but knowing and intentional.
In insurance disputes like this, in order to determine whether the insurer has a duty to defend, the courts employ what’s called an eight-corners test. The court compares the four corners of the policy with the four corners of the complaint to see whether the actions complained of in the lawsuit fall within the coverage afforded by the policy. If at least one claim is potentially covered, the insurer must at least defend the litigation. If not, the insurer has no duty to defend, and the alleged tortfeasor is on his own to handle the suit.
In the trial court, AES pointed out that the Alaska suit stated claims based on both intentional and negligent conduct. In language familiar to tort lawyers, the plaintiffs contended that AES and its alleged corporate colleagues acted “intentionally or negligently” and “knew or should have known” that their activities would cause global warming and the resulting erosion damage. AES also pointed out that as long as one claim in the lawsuit – here it pointed to the specific allegation of negligence and to the “or should have known” language, which implicates negligence instead of an intentional tort – was potentially covered, the insurer had a duty to defend.
The trial court granted summary judgment to the insurer, holding that the mere mention of a negligence-based claim was not enough to make this into an insurable set of allegations. The Supreme Court granted AES a writ to review this novel issue.
Today, the full court affirms the judgment. In doing so, the court looks behind the pure allegations of the Alaska complaint and finds that despite the ”negligently” and “or should have known” language, this suit alleges only an intentional tort, for which the insurer has no duty to defend:
In the Complaint, Kivalina [the Alaska plaintiffs] plainly alleges that AES intentionally released carbon dioxide into the atmosphere as a regular part of its energy-producing activities. Kivalina also alleges that there is a clear scientific consensus that the natural and probable consequence of such emissions is global warming and damages such as Kivalina suffered. Whether or not AES’s intentional act constitutes negligence, the natural and probable consequence of that intentional act is not an accident under Virginia law.
More ominously for a large number of tort claims, the court holds that the mere allegation of negligence by a tort plaintiff “do[es] not support a claim of an accident.” I will assume that I now have the full attention of all insurance-defense attorneys out there; this decision gives the insurance industry a massive victory that isn’t limited to global warming claims. If there’s any doubt about that, or the great reach of this holding, here’s the pièce de résistance:
When the insured knows or should have known of the consequences of his actions, there is no occurrence and therefore no coverage. (Emphasis in original)
Remember, this policy defines an occurrence as “an accident,” and previous Virginia caselaw confirms that the two terms are synonymous. An allegation that a defendant “knew or should have known” that its actions would cause harm has previously been held by the Supreme Court to trigger the duty to defend, since the plaintiff might eventually recover on the lesser, negligence-based claim. But now, under Virginia law, an allegation that a defendant “should have known” that his conduct would cause injury states a claim for an intentional tort instead of one based on negligence.
Here’s a big reason why this case merits your attention, even if your only tort practice involves routine auto-collision cases: In a footnote, the court alludes to a distinction between an “accident” (or occurrence; they’re synonymous here) on the one hand and “negligence” on the other, but there’s no explanation of that distinction in the opinion. In plain terms, damage can be caused either intentionally or unintentionally (i.e., negligently, by accident); there is no third option of which I can conceive. I doubt that trial courts will find one, either.
Make no mistake – this ruling will work a fundamental change in the way tort claims are pleaded in Virginia. In the past, plaintiff’s lawyers, careful to avoid jeopardizing insurance coverage by pleading intentional torts, have included at least one negligence-based claim, so the insurer can’t strand the tort defendant. Such claims typically included the very same “or should have known” language, in order to state that negligence claim.
As of today, that won’t be good enough to keep an insurer in the case, and a good many tort defendants are going to find themselves going into court without coverage. Inevitably, some defendants may seek bankruptcy protection from at least the negligence-based claims (liability for intentional torts can’t be discharged in bankruptcy). Most likely, it will sharply curtail allegations of intentional torts, even as alternative counts, in tort suits; smart plaintiff’s lawyers just won’t take the chance of jeopardizing coverage and leaving their plaintiffs with no meaningful way to collect on a judgment.
Today’s ruling isn’t quite unanimous. Senior Justices Koontz and Carrico evidently see the danger in the broad language that the majority (written by Justice Goodwyn) uses today. They concur in the result, but urge that the ruling should be read only in light of the peculiar language of this policy, not broadly. But as you’ll note by simple math, such a narrow interpretation can muster only two votes, and the broader view is the one that will carry weight in trial courtrooms from now on.
In a case of first impression in Virginia, the Supreme Court today decides whether an uninsured subcontractor can claim the benefit of the statutory bar on tort liability when a general contractor’s employee is injured. The decision is David White Crane Service v. Howell.
Howell was injured by a statutory co-employee. He recovered Comp benefits from his employer, but because the subcontractor was uninsured, he filed a tort action against the subcontractor and its (allegedly) negligent employee. The trial court held that because the sub didn’t have Workers’ Comp insurance, the statutory bar did not apply and the tort action could proceed.
Virginia law permits a trial court, with the consent of all parties, to certify an issue for interlocutory appeal. That happens rarely, but it’s what brings this case to the justices, even before the tort action can be fully litigated below. Since the underlying ruling was decided on stipulated facts, the Supreme Court reviews the entire matter de novo.
In 1973, the court decided a case in which an employee got a Comp award, but it proved uncollectible because the employer was uninsured. The employee filed an ordinary tort suit against the employer. The Supreme Court ruled in that case that “the employer’s failure to carry workers’ compensation insurance, as required by the Act, forfeited the protection from a common-law action that he would otherwise have had under the exclusivity provisions of the Act.” Based on this holding, the employee here argued that the subcontractor wasn’t entitled to the protection of the Comp bar, and neither was his employee.
The Supreme Court rejects this argument and reverses. It rules today that the failure of an employer to provide Workers’ Comp insurance does not deprive it (or its employees) of the benefit of the Comp bar. The two men were unquestionably statutory co-employees, and the justices give us this guidance for future litigation: “The injured worker’s sole remedy for job-related injuries caused by statutory co-employees is a claim against his own statutory employer for an award of workers’ compensation benefits.”
How does the court distinguish the 1973 ruling? It finds “a significant difference between the facts.” In the earlier case, the injured worker got no recovery on his Comp award, while Howell, in this claim, had already recovered on a direct Comp claim from his bosses. You can’t get two recoveries for the same claim, the justices hold today.
We’ve met the dramatis personae in Fox Rest Associates v. Little before. It involves a troubling set of facts involving an attorney who was acting as a general partner for a limited partnership that owned an apartment building. Based on allegations of self-dealing and a failure to provide proper fiduciary care, the limited partners got a seven-figure award against the attorney several years ago. In 2007, in Little v. Cooke (my earlier analysis is here; you’ll need to scroll down to the Damages section), the Supreme Court reversed in part and remanded; the parties then settled the claim, but nearly a million dollars of the claim remained unpaid.
The partnership then filed suit claiming that the lawyer conveyed assets to his wife, in order to shield those assets from creditors and while the attorney was insolvent. That case went to trial, but the trial court granted a motion to strike once the plaintiff rested. Today, on appeal, the Supreme Court reverses the judgment and remands the case for further proceedings.
If you have only a passing familiarity with fraudulent and voluntary conveyances, you may not know that they’re two different animals, each entitled to its own statute. A fraudulent conveyance is one made with the intent to hinder collection by creditors. A voluntary conveyance requires no proof of sinister intent; all the plaintiff has to show in order to get relief is that the conveyance was not for valuable consideration and was made while the grantor was insolvent (or that the grantor became insolvent as a result of the conveyance).
Here, the attorney made certain conveyances to his wife, at a time when it was fairly obvious that the limited partners were more than a little unhappy with him. The court analyzes each claim in turn. On the fraudulent-conveyance claim, it finds that the conveyances bore one or more “badges of fraud,” in that (1) they were made to a family member, (2) the grantor retained an interest in the property (actually, monetary proceeds) conveyed, (3) the transfers were made after the grantor knew of his creditors’ dissatisfaction with his services, and (4) the grantor retained possession of property despite the transfer of title to someone else.
Importantly, the court notes that the plaintiffs need not prove that the grantee (the attorney’s wife) was aware of a fraudulent intent, as long as she had enough information to excite a reasonable suspicion. The court finds that the plaintiff proved that, at least prima facie, in this case, so the fraudulent-conveyance suit is remanded so the wife can attempt to rebut the claim.
On the voluntary-conveyance claim, the court notes that the trial court really didn’t address this count in granting the motion to strike; that court had focused entirely on the fraudulent-conveyance aspect of the litigation in dismissing the case. The Supreme Court today concludes that the plaintiff made a prima facie showing of a voluntary conveyance based on the insolvency of the grantor – an expert witness had expressly so testified. The court thus remands that claim for trial, too.
What’s a “customer”? That question is at the heart of Bank of the Commonwealth v. Hudspeth, which starts out as a garden-variety suit for unpaid salary and veers directly into the question of arbitrability.
The bank hired Hudspeth in late 2005 to serve as a vice president of an investment affiliate. Just over two years later, he was out of a job; he subsequently sued for over $200,000 in unpaid salary. The bank responded in part by moving to compel arbitration of the claim.
You may be surprised to learn that Hudspeth had never agreed to arbitrate salary disputes. Nevertheless, the bank insisted that it had a right to compel arbitration because of internal regulations of the Financial Industry Regulatory Authority (the successor to the better-know National Association of Securities Dealers). Those regulations permit a “customer” to move to arbitrate disputes with securities brokers, and the bank pointed out that Hudspeth was a registered broker.
The trial court didn’t bite. The regs didn’t really define what a customer is, other than by negative implication: “A customer shall not include a broker or dealer.” But instead of using an expansive definition (every person or entity that isn’t a broker or dealer is therefore a customer), the trail court decided to take a more “holistic point of view” in deciding what a customer was. After all, is an utter stranger a customer? No, the court ultimately ruled; the bank isn’t a customer, so it can’t move to compel arbitration.
Since a refusal to compel arbitration is immediately appealable by statute, the bank went out and got a writ. Today, the justices reverse the trial court’s ruling and direct the lower court to send the matter to an arbitrator.
So how does a bank become a customer? Exactly as the bank laid out above. Arbitration occupies a favored position in American law, and if there’s any ambiguity over whether arbitration is available (or as here, compulsory) or not, the courts must err on the side of arbitrability. The court unanimously concludes that the bare-bones definition of customer in the regulations “is ambiguous and susceptible to a meaning which covers the parties and dispute in this case.” The opinion includes language indicating that the justices clearly aren’t comfortable with this result, but as we all know, they’re compelled to enforce the law as it’s written instead of as clearly as we’d like for it to be.
As I was reading Zinone v. Lee’s Crossing Homeowners Association, I thought of the famous tale of Aladdin and the magic lamp. If you discovered the lamp and the genie offered to grant you three wishes, what would your first wish be? If you had any brains at all, you’d respond, “I wish you would grant me an unlimited number of wishes.” That way, you’d never have to agonize over how to spend that precious third wish, or worry that one of your ill-considered wishes would go awry (with unlimited wishes, you could just wish the problem away).
Zinone isn’t about genies or wishes; it’s about the comparatively dry milieu of homeowners’ associations, and more specifically about amendments to the developer’s declarations of restrictions. The developer recorded a set of restrictions that allowed the association’s members to amend the restrictions by a 2/3 vote. The declarant also reserved unto itself the right to unilaterally amend the declaration at any time within two years of the date of recordation of the declaration.
That all seems quite ordinary, but you’ve forgotten about the genie, which has the power to grant wishes. In this instance, the declarant decided to play the role of genie itself; it unilaterally amended the declaration from time to time, extending the time limit for its power to unilaterally make amendments. Utilizing that power, it amended the substantive regulations and enforced them in a way that angered one of the homeowners (that would be where Ms. Zinone comes in).
Zinone sued, claiming that the Property Owners Association Act limited the declarant’s ability to make unilateral amendments. On reciprocal motions for summary judgment, the trial court sided with the declarant. On appeal, the Supreme Court affirms. It contrasts the language in the Condominium Act, which states that “condominium instruments shall be amended only by agreement of unit owners of units to which two-thirds of the votes in the unit owners’ association appertain,” with that in the POAA, which states that “[a] declaration may be amended by a two-thirds vote of the owners.” (Emphasis supplied by Supreme Court in both instances)
The court thus finds that property owners’ associations aren’t as restrictive, at least when it comes to amendments, as are condo documents. The court finds a rational basis for this distinction in the fact that POAs involve individual homes while condominiums are generally multi-unit, so the declarant can, indeed, grant itself additional wishes – or at least additional time.
The dispositive issue in McCarthy Holdings LLC v. Burgher is whether a grant of an exclusive easement, without specifying a particular use to which the grantee may put the property, actually conveys fee simple title.
This particular easement gives the grantee “exclusive use of the land set forth in the Easement Area.” In contrast, non-exclusive easements entitle the grantor, the owner of the servient tenement, to grant other easements to other grantees, as long as those new easements don’t impair the first grantee’s rights.
The Supreme Court today agrees with the trial court that the language used here was not sufficient to divest the grantor of its right to make reasonable use of the easement area, so long as it did not unreasonably interfere with the grantee’s easement rights. The court distinguishes an earlier case in which it held that an exclusive easement could be granted “for all purposes,” thereby divesting the grantor of all right to use the land. Such grants are disfavored in the law, and the court draws support from the fact that the parties repeatedly described the agreement as one creating an easement instead of one granting a fee.
This case produces the only dissent of the day, as Justice Mims just can’t swallow the idea of an exclusive easement that somehow allows the grantor to retain rights. He argues: “The term ‘exclusive use’ is clear, unambiguous, and absolute. Adjectives such as ‘exclusive’ and ‘unique’ are not subject to modification by adverbs to become more so. A condition that is exclusive cannot be modified to be more exclusive.”
This argument brings to mind other grammatical conundrums, such as that implicit in the phrase, “extremely average.” Justice Mims concludes that using an absolute term such as exclusive unambiguously conveys to the grantee the right to use the property exclusively, and that gives him the right to exclude the grantor, too.
Bell v. Casperis a sad tale of intra-family homicide, and manages to implicate four generations. Chronologically, Generation #2 is the decedent. Generation #3, the decedent’s son, is also her murderer. This litigation pits Generation #1, the decedent’s mother, against Generation #4, the murderer’s children, to see who gets the decedent’s property.
To my knowledge, I have never seen litigation in which two minors sue their great-grandmother, but we can all see how this litigation arose, and why.
The dispute in the case is one of statutory interpretation of a change to Virginia’s slayer statute. The murder occurred in 2005. At that time, the statute prohibited a slayer, and “any person claiming through him,” from acquiring any property as a result of the murder. In 2008, before the murderer’s 2009 conviction, the statute was amended; it now allows this kind of “generation-skipping transfer.”
In the trial court, the great-grandmother argued that the previous statute, in effect at the time of the death, should apply. The children (suing through next friends) responded that the courts should apply the statute that was in effect on the date when their father was actually determined to be a slayer. Both sides have at least plausible arguments, so it’s up to the justices to decide, interpreting the statute de novo, since this is a question of pure law.
The court today rules in favor of the great-grandmother, applying the statute that was in effect at the time of the death. Applying the later statute would effectively make this a retroactive law, and courts won’t adopt that interpretation unless the legislature clearly provides for a retroactive effect. That doesn’t appear in the 2008 amendment to the statute.
The court issues two adoption opinions today. The first one, Kummer v. Donak, falls in the “you can’t have it both ways” category. Like Bell v. Casper in the section immediately above this one, it involves the question of who succeeds to a decedent’s estate.
The decedent in this case died intestate with no immediate family. Donak was appointed to administer the estate, and she learned that the decedent had had a biological sister. That sister was also deceased, but she, in turn, had three surviving children, and those three (including Kummer) looked to be the nearest surviving relatives, and presumably entitled to the estate.
And then the monkey wrench arrived. The administratrix learned that the mother of the three presumed beneficiaries had been adopted as an adult over 25 years earlier by her own aunt. That matters because under Virginia law, an adoption severs all family ties between biological parent and child; it was as though the adoptee were of no relation to her biological parents.
This is a big problem for the three almost-heirs, because now their family connection with their dear, departed aunt, the one who died with no closer heirs and fifty acres to her name, is gone. The trial court enforced the terms of the adoption statute and held that the three had no claim on their biological aunt’s estate, because their late mother had effectively left the family.
The heirs argued in the trial court and in the Supreme Court that the adoption of an adult is different in effect than the adoption of a child, so a family relationship can still survive an adult adoption. But that provision, intriguing as it sounds, just isn’t found in the statutes. The Supreme Court today affirms the ruling of the trial court that the three siblings are disinherited because of their mother’s agreement to be adopted at the age of 53.
In case you’re wondering who gets the proceeds of the land, today’s opinion doesn’t tell us. It looks like it’s back to the drawing board for the administratrix, who I hope is getting paid well for her efforts.
Today’s other adoption decision is Copeland v. Todd. It involves a child born to an inmate at a regional jail. The mother agreed to allow the jail’s minister and a friend to take custody, because the child obviously could not be raised behind bars. The mother was released five months later, but the little girl remained in this arranged foster care, because the mother had no means of supporting her.
As foster arrangements go, this one would probably qualify as relatively smooth. The foster parents allowed and even facilitated visitation, but over time, the frequency of these visits tapered off. The little girl got to see her mother for a period of a few years without knowing that the visits were with her birth mother.
When the child was three, one of the foster parents met the mother and asked for consent to adopt the child. The mother had not seen her daughter for a year, but she refused the request and asked for a visit; that visit was immediately arranged, and lasted for 30 minutes.
The parties then headed off to court: the mother went to JDR to seek formal visitation rights, while one of the foster parents filed an adoption petition. The former court granted regular visitation, and the latter court took up the question, implicated in this appeal, of whether a court should approve an adoption without the consent of the natural parent.
The best interests of the child, while of paramount importance in custody disputes between divorcing parents, are not the end of the inquiry in adoption cases. In these cases, the natural parents have a due process interest in making child-rearing decisions, and that right cannot be overcome merely because the child would be better off elsewhere; otherwise, Bill and Melinda Gates could adopt any child they wanted, merely by offering things like world-class health care, a first-rate education, and a superior living environment to what poor or even middle-class parents could provide.
As noted above in my discussion of the Kummer decision, an order of adoption terminates the relationship between biological parent and child, and the mother here didn’t want that. But the trial court granted the petition anyway, citing two reasons to overcome the mother’s lack of consent. The first was a finding that the mother “without just cause, has neither visited nor contacted the child for a period of six months prior to the filing of the petition for adoption.” Code §63.2-1202(H). As a sort of reversed-and-remanded insurance, the court appended an alternate finding that the mother withheld her consent contrary to the child’s best interest.
A panel of the Court of Appeals reversed. With regard to the first holding described above, it found that the six-month period specified in the statute had to immediately precede the filing of the adoption petition. The trial court had used a previous one-year stretch, but that won’t work under this statutory framework, the CAV ruled. On further review, the Supreme Court today agrees with this ruling.
On the second issue, the CAV panel and the Supreme Court differ, and of course, the justices get the final say. The CAV had ruled that the adoption statute was unconstitutionally applied to the mother because it failed to account for her due process interests; the Supreme Court disagrees and reinstates the adoption order today.
The court’s ruling on the second issue is the product of a complex set of statutory changes. Before 1995, the statutes only required consideration of the child’s best interests; the Supreme Court effectively grafted onto that scheme the requirement to honor the parents’ due process rights, to comply with the Due Process Clause. In 1995, the legislature codified that requirement, requiring a finding of detriment to the child. This analysis specifically called for consideration of the parents’ interests.
This happy arrangement lasted a decade, until the General Assembly removed the “detriment to the child” language from the statute. In this litigation, the mother contended that this legislative act violated her due process rights, and on its face, that looks like a plausible argument. But the Supreme Court notes today that the only thing removed was the “detriment” language; the required analysis of the parents’ interests remains in the statute.
The opinion closes with a brief analysis of the mother’s equal protection claim. She argued that Virginia law treats her differently than it does parents whose rights are sought to be terminated by DSS petition. The justices reject this argument by noting that equal protection must be afforded to persons within the same class, not across different classes. The court finds that “[u]nlike the foster care context, here the government did not remove the child from Todd’s custody. Rather, by entering into the entrustment agreement with Guenther and Copeland, Todd voluntarily relinquished custody of the child.” This reflects the court’s prior jurisprudence, in which persons who enter into foster-care arrangements are afforded fewer legal rights than are those where the state steps in directly to take a child.
Sexually violent predators
In one sense, Commonwealth v. Bell presents a rare feature – a reversal based on insufficiency of evidence to support a trial judge’s finding. Oh, that kind of thing happens from time to time, but the daunting standards for such reversals ensure that these occasions are rare. Still, when you read the recitation of the proceedings, you’ll understand why it happens here.
Bell was adjudicated a sexually violent predator in 2009. By law, he must have annual reviews to determine whether he should continue to be held for inpatient treatment. In the 2010 review, the Commonwealth’s psychological expert opined that he was still a predator and still needed to be confined and treated. Bell’s appointed psychologist felt that he had made significant progress over the first year, but he concluded his report with this statement: “While I opine that Mr. Bell is making progress in treatment, I do not consider him to be a viable candidate for conditional release at this time.”
Okay, so we all know how this annual review is going to turn out, right? The experts for the two sides agree that he shouldn’t be released yet.
But that’s exactly what the trial court ordered, despite its finding that Bell “remains a ‘sexually violent predator.’” It directed that he be released from custody. The Commonwealth got a writ (and presumably suspension of execution of the trial court’s release order), and today the Supreme Court reverses. The justices find that, even in the light most favorable to Bell, “only one conclusion is permissible” from the evidence: Bell isn’t ready for release under the standards set forth in the Act.
The opinion does go through the process of reciting that evidence in the light most favorable to Bell, so this case isn’t merely a comparison of the experts’ views followed by a curt conclusion and the word reversed. Granted, the record in this case might have included other matters that would support the trial court’s decision to order release (though I doubt it; if there were, Senior Justice Carrico certainly would have mentioned it today). But upon reading this opinion, one wonders whether someone asked, during the justices’ decision conference in this case, “What was he thinking?”
I cringed when I read Comtois v. Rogers. Normally, I don’t cringe a lot when I read opinions, but I definitely cringed here. This appeal arises from litigation over the dissolution of a partnership; the ultimate question is whether a court, in ordering a winding up of the partnership, must order an accounting.
The problem with litigating internal business matters like this is that you end up airing all your laundry, and sometimes, as here, the laundry gets preserved for all time by publication in Virginia Reports. Even worse, this partnership was (cringe imminent) a law firm.
At 16 pages, this opinion isn’t terribly long, but as with many complex business arrangements, the factual recitation is fairly complex. Instead of going through the facts and background (which occupy seven pages of today’s opinion), I’ll summarize the relevant rulings for you. Partnership jocks can click on the link above and pore over the linen at leisure.
First, the court rules that the partnership agreement controls over conflicting principles of accounting. One issue that the parties litigated involved the balances in the four partners’ capital accounts. Normally, accounting requires that those account balances rise and fall with each partner’s additions to and withdrawals from the firm’s finances, and an expert testified accordingly. But the partnership documents (no doubt crafted by a law firm) in this case fixed the capital accounts at the amounts of the initial contributions, plus any formal capital calls.
The appellants found fault with the trial court’s failure to adjust the appellee’s balance, but the Supreme Court rules today that no adjustment was permissible here, based on the way this firm had been set up. It affirms that part of the trial court’s holding.
The second issue will be of wider interest, and apparently presents a question of first impression in Virginia. In ruling on the complaint, the trial court granted judgment to one of the partners, but it never addressed the other partners’ request for an accounting to accompany the dissolution. The Supreme Court reverses this part of the judgment today, and it remands the case with a direction to the trial court to conduct that accounting. That will enable the three appellant partners to press their claims that the appellee partner overdrew his share, and actually owes them money.
For an entirely different reason, I cringed yet again when I read today’s separate order disposing of a cross-appeal by the other partner, Rogers, in the case of Rogers v. Comtois. This one wasn’t a general-lawyer cringe; it was a purely appellate cringe. The court dismisses this appeal with prejudice because the appellant here changed the wording of the assignment of error when he filed his brief of appellant. In the petition for appeal, he assigned error to the trial court’s failure to grant him interest on the amount of its judgment in his favor. But once the justices granted him a writ, he modified the assignment to claim that the trial court should have awarded him interest on other sums, too.
I don’t know the lawyers involved in this case, but I infer that the one representing the appellant here isn’t a faithful reader of this website. As we have repeatedly noted here, you cannot change the language of an assignment once the appellate court grants a writ. (This rule is limited to substantive changes, not to correcting things like misspelled words.) The language of the assignments irrevocably frames the issues on appeal, and you can’t modify them at will.
I’ll add that changing the language isn’t automatically fatal. The court can still consider the case based on the original assignment. But where, as here, the appellant’s brief fails to argue the issue as originally framed, the court regards the assignment as abandoned.
Siska Revocable Trust v. Milestone Development, LLC is a derivative action over control of a family limited liability company. As with the law firm’s case, the facts tend to get complex, but the two rulings are straightforward, and depend only on one aspect of the facts and procedural posture. The primary question presented here is whether, in a derivative action, the LLC itself must be joined as a member. Secondarily, the court considers whether the absence of the LLC from the case is a jurisdictional defect.
The full name of the plaintiff is all you need to know here: “Michael E. Siska Revocable Trust, by Michael Siska, Trustee, Derivatively in the Right and on Behalf of Motel Investments of Christiansburg, LLC.” The object of the suit was Motel Investments of Christiansburg, and specifically who got to control it. Note that the only plaintiff is the trust; the defendants comprised the other members of the LLC.
The trial court dismissed the suit, finding that the trust could not fairly represent the interests of all of the members. A fairly persuasive Exhibit A to this ruling was the trust’s request for $10 million in damages against the other members. The trust got a writ, and evidently for the first time on appeal, the defendants/appellees contended that the courts had no jurisdiction over the case because of the absence of a necessary party – the LLC itself.
The Supreme Court disposes of this issue in an interesting way. It spends most of the analysis section of this opinion – ten of the 13 pages – rejecting the contention that the absence of a necessary party deprives the trial court of jurisdiction. Much of our legal framework leads to this conclusion; the statutes permit the addition of omitted parties instead of mandating dismissal, and a rule of court provides the mechanism for joining necessary parties who aren’t before the court. The appellant thus wins this battle.
But the appellees win the war, based on a comparative skirmish that comes thereafter. In the last three pages of the opinion, the court rules that in a derivative action like this one, the subject LLC is a necessary party. The absence of a necessary party, while not jurisdictional, means that “the court refuses to entertain the suit” until the necessary party is added and summoned. The case is accordingly remanded “for further proceedings not inconsistent with this opinion.”
What will those proceedings look like? Well, the justices have already told the trial judge that he shouldn’t simply dismiss the case for want of jurisdiction; he has to allow the plaintiff trust to join the LLC as a party (presumably as another defendant). Once that happens, it’s quite foreseeable to me that another hearing, much like the first one, will take place, and the court may well rule yet again that the trust can’t fairly represent the other members – unless, perhaps, it decides to drop that big damages demand. Then we’ll see how things shake out, and who knows? We might see this case in Richmond again in a couple of years.