Va. Supreme Court says lower court erred in Sweet Briar case, sends it back, as advocates cheer
By Susan Svrluga, Washington Post – 6/9/2015
A Virginia Supreme Court ruling Tuesday elated advocates working to keep Sweet Briar College from closing, as justices wrote that a lower court had erred and sent the case back for more arguments.
The private women’s college is slated to close forever this summer, after its president announced what he called “insurmountable financial challenges” in March. Alumnae and others have been working feverishly against the clock to keep it open through lawsuits, fundraising and protests.
In the case at hand, Amherst County Attorney Ellen Bowyer sought to stop the closing, arguing that it would violate the terms of the will upon which the college was founded, and that charitable funds have been misused. After a circuit court did not fully grant Bowyer’s request for a temporary injunction that would stop the closing, the case was appealed to the Virginia Supreme Court.
Responding to the appeal, justices concluded that Circuit Court Judge James Updike erred when he ruled that the law of trusts cannot apply to a corporation and declined the injunction. The case now returns to the circuit court, though the Supreme Court did not rule on the merits of the case.
So it’s far from over — as the justices wrote:
“The parties are engaged in widely publicized, closed-door negotiations. The legal issues are still evolving, and the factual record underpinning the parties’ allegations and defenses has yet to be fully developed. In short, the controversy of the College’s scheduled closing is far from over, and all agree that the ultimate merits of the controversy are not, at least for today, squarely before this Court.”
But they did conclude one key point, saying the circuit court decision was made in part upon an “erroneous” legal conclusion.
“The law of trusts can apply to a corporation,” they wrote.
According to the court, an earlier motion for a temporary injunction is extended until June 24, 2015 “for further consideration by the circuit court in light of this order.”
The finding that a corporation can be considered a trust “opens the door to a finding that a trust exists to protect the terms of Indiana Fletcher Williams’s will,” Bowyer said in a statement. That will established the college in 1901.
She said she was delighted that the Virginia Supreme Court “has asked the circuit court to reconsider its decision relative to the question of a trust, and I am hopeful that on reconsideration, the circuit court will agree with my position: that Sweet Briar College is a trustee of the trust formed from Indiana Fletcher Williams’s Will.”
“Time remains of the essence,” she wrote, “and we will seek to move quickly to reach resolution in the circuit court.”
She hopes the case will be heard before Judge Updike from June 22 through 24.
A spokeswoman for Sweet Briar said that the decision is unlikely to have significant impact on the pending litigation. “The court did not rule on the merits on any legal or factual issues,” Christy Jackson said in a statement Tuesday afternoon, “including whether Sweet Briar College is both a corporation and trustee or whether the Amherst County attorney has legal standing to file a claim under the Virginia Uniform Trust Code.
“It is also important to note the court did not grant any new injunctive relief.
“Rather, it extended by nine days an injunction already in place enjoining the use of certain solicited donations. Another hearing in this matter would have been necessary regardless of today’s ruling.”
Lawyers for Sweet Briar had just received the ruling and were still reviewing it, a spokeswoman for the college said Tuesday. They have said in the past that the private college’s board had the right, and the duty, to close the school, and that Bowyer’s claims are “contrary to well-established Virginia law as expressed by both the General Assembly and the Supreme Court of Virginia.”
But the nonprofit group organized by alumnae — Saving Sweet Briar — and a lawyer representing students and parents in another lawsuit against the college, both hailed the decision as a victory.
“Today’s Virginia Supreme Court ruling is a major legal victory for the students, faculty, staff and alumnae of Sweet Briar College, for women’s colleges and for the sanctity of charitable bequests made in this country,” Sarah Clement, the chair of Saving Sweet Briar, said in a statement. “We are grateful that the Virginia Supreme Court has accepted the arguments of County Attorney Ellen Bowyer that Sweet Briar College can be both a trust and a non-stock corporation.”
The group now hopes for more dramatic action by the circuit court to stop the college from closing.
“With the trust issue now resolved by the Virginia Supreme Court, we will move to seek the appointment of a special fiduciary to assess the college’s true finances and determine what is needed to close the current funding gap to ensure the College can remain open,” Clement said.
A trustee is a person or a corporation holding legal title to property, said William Hurd, special counsel to Bowyer, required to use the property for the benefit of someone else. In this case Sweet Briar holds legal title to the land, buildings, endowment and so forth, but those things must be used for the education of young women, he said, by the terms of the will. “So this is not like a corporation that makes widgets and can decide whenever it wants to stop making widgets,” he said. “We’re very pleased that the court has given us this victory, given us the platform we need in our efforts to save Sweet Briar.”
L. Steven Emmert, an appellate lawyer based in Virginia Beach and publisher of Virginia Appellate News and Analysis, said the ruling is “at least a technical victory, a legal victory,” for those seeking to keep the school open. “It may be more of a substantive victory for them. It still leaves the matter in the discretion of the trial judge whether to issue an injunction more fully.”
The court extended the temporary injunction in the case until June 24, which is not a mandate, he said. But he said it is a signal that the justices expect the trial court to issue a decision or reconvene in the next 15 days to reconsider it, with the understanding that trust law can be applied to the case.
“We can expect more news out of this case in the very near future,” Emmert said. “The justices are expecting the judge to go back to this promptly.”
One thing struck him as very unusual, which he has never seen in more than 10 years of writing about decisions for his Web site: The full bench considered the appeal seeking an injunction, rather than a panel of three justices.
“That tells me the justices take this very, very seriously,” he said, as did the speed with which they acted. An appeal often takes a year, but the justices turned around “this lightning ruling in five days.”
He also noted: “The fact that they stopped short tells me they’re a little concerned about going too far,” with a ruling. They didn’t take on the issue of standing – whether the county attorney has the authority to seek this kind of relief – which is a key issue that the ruling just noted they would not presently determine. “They’ll let the trial judge have first crack.
All the speed is tied to a fundamental issue that has nothing to do with the law: The academic calendar. Sweet Briar had its graduation last month, it is moving rapidly toward shutting down all of its operations, current students have arranged to go to other schools for next year and there are no new students set to enroll this fall.
“That’s kind of ominous, right?” Emmert said. “Even if they win, they don’t have a freshman class.”