After Benitez, high court still eschews sanctions

By Alan Cooper, Virginia Lawyers Weekly – 3/11/2011

Lawyers and judges look to the Supreme Court of Virginia for benchmarks in trial courts’ awards of sanctions for “frivolous” pleadings.

The high court set one such benchmark four years ago, when it upheld sanctions against an insurance defense lawyer who filed the same list of affirmative defenses when a products liability suit was nonsuited, then refiled after substantial discovery.

The trial judge, who thought the lawyer could have sorted through the available defenses before refiling them all, whacked the lawyer for $2,500 under Virginia Code §8.01-271.1, the sanctions statute.

On appeal, the high court surprised practically everyone. It upheld the award in Ford Motor Co. v. Benitez (VLW 007-6-001). Over the years, numerous judges across the state had levied sanctions under §8.01-271.1 in a variety of situations, only to see the Supreme Court reverse. Only two sanctions awards ever had been upheld.

With Benitez, the high court had hit a nerve, especially among defense lawyers. The case was the buzz of the bar for months. It struck at a very basic defense-lawyer practice: Defense attorneys often listed any conceivable affirmative defense in their pleadings, in part because case law had suggested that defenses could be waived if not pleaded.

So what has happened since? Any fears that the Supreme Court might be looking to hold attorneys to stricter account in their pleadings have not been borne out.

The court has decided three cases since Benitez in which a circuit court awarded sanctions under Virginia Code § 8.01-271.1.

And in each case, it has set aside the award.

The most recent case was handed down just this month, Johnson v. Garr (VLW 011-6-033).

Forty Gloucester County residents filed petitions in circuit court under Virginia Code §§ 24.3-233 and 24.2-235 seeking removal of four members of the county board of supervisors.

A special prosecutor nonsuited the removal action after finding the petitions defective and concluding that the allegations might have involved bad judgment but not criminal acts. The supervisors applied for attorneys’ fees and costs and sought sanctions against the petitioners.

Judge Designate Westbrook J. Parker hit each of the 40 petitioners with a $2,000 sanctions award under Code § 8.01-271.1.

The General Assembly took swift action in 2009 when it amended § 24.3-233 to bar the imposition of sanctions against anyone who signs or circulates a removal petition.

Parker’s sanctions of the Gloucester petitioners remained, however, and they appealed to the Supreme Court.

The Supreme Court held that the petitioners were analogous to victims in a criminal proceeding, so that the real party interest is the commonwealth. Because § 8.01-271.1 applies only to attorneys and parties, sanctions could not be imposed on the petitioners, the court held.

The other two recent sanctions cases involved an unusually persistent attorney and a lawyer who short-circuited a trial by filing a bankruptcy petition electronically the evening before the trial was scheduled to begin.

A Norfolk circuit judge ordered the attorney who filed the bankruptcy petition to personally pay $14,090 – the fees, expert charges and costs the judge concluded had been incurred in the week before trial.

The judge based his ruling on the filing of a witness and exhibit list when the attorney did not intend to try the case. The Supreme Court set aside sanctions after concluding in McNally v. Rey (VLW 008-6-047) that there was no basis in the record for such a finding.

The Supreme Court decided the persistent attorney case, Ferris v. Kiritsis (VLW 010-6-059), by unpublished order, a procedure that L. Steven Emmert, the Virginia Beach appellate specialist who represented the attorney, suggested might have reflected a reluctance by the court to appear to be endorsing the filing of three motions to reconsider a default judgment.

The third motion was one too many for a Chesterfield circuit judge, who imposed an $800 sanction.

Emmert contended that it wasn’t as bad as it looked for his client because the first judge to hear the case had invited the second reconsideration motion, and the third motion amounted to a request for another judge to look at the issue because the first judge discovered a conflict and disqualified himself.

Emmert emphasized that there had been no argument or finding about the specific factors mentioned in § 8.01-271.1, and the Supreme Court adopted Emmert’s rationale in reversing the sanctions.

Kevin E. Martingayle, a Virginia Beach lawyer, has followed sanctions cases closely since the Supreme Court upheld them in 1999 in Cardinal Holding Company v. Deal (VLW 099-6-138).

The court upheld more than $32,000 in sanctions against a Richmond lawyer and his firm because they pursued an assigned legal malpractice claim despite controlling authority that a legal malpractice claim cannot be assigned.

Martingayle said he believes the court has been consistent in upholding sanctions when “the right people are sanctioned for the right reason based on a well-developed record.”

Stanley P. Wellman, a civil defense attorney in Richmond, said he believes many of his colleagues focused too much on what could be viewed as a challenge to the way they tried cases rather than on the unusual circumstances of the case.

Wellman said his firm has seen no rise in Benitez-related motions.

He said he suspects the plaintiff’s bar has been somewhat reluctant to push aggressively for sanctions because of a concern that the defense bar might respond with more challenges to plaintiffs’ pleadings.

The Supreme Court will have an opportunity to expand its § 8.01-271.1 jurisprudence in a case involving sanctions against a plaintiff and her attorney.

Fairfax Circuit Judge Jonathan C. Thacher, the same judge who imposed the sanction on the defense attorney in Benitez, ordered the attorney and plaintiff in a dispute over a real estate commission to pay $272,096 in attorneys’ fees and costs. The suit was filed “out of a vindictive and malevolent desire to injure and intimidate a business competitor,” Thacher found.

The Supreme Court granted review of the case, Northern Virginia Real Estate Inc. v. Martins, Record No. 101836, in December.

The justices “recognize that sanctions should be a last resort” and are “sensitive to the fact that some lawyers are trigger-happy” in filing a motion for sanctions, said Emmert, who represented the sanctioned party or attorney in all three post-Benitez cases.

He suggested that a phone call rather than a sanctions motion remains the proper response to a perception that an adversary may be out of line.