ANALYSIS OF APRIL 13, 2017 SUPREME COURT OPINIONS
(Posted April 13, 2017) Today, as the Nation and the Commonwealth mark the birthdate of the man who brought us the Declaration of Independence and the Virginia Statute for Religious Freedom, the Supreme Court hands down nine published opinions. This batch will foreseeably take me until well into Friday to cover, but bear with me and we’ll get through them all.
Standing
In 2014 and 2015, the Fairfax School Board amended its anti-discrimination and anti-harassment policy to include sexual orientation and gender identity/expression to the list of protected classes. While prohibiting harassment seems a noble cause, not everyone agreed with the policy. The head of a local organization called the Traditional Values Coalition rebelled at the idea and filed suit. She was joined by an anonymous student and his parents. The plaintiffs sought a ruling that the board didn’t have the legal authority to amend its policy; they sought declaratory and injunctive relief.
A circuit court dismissed the complaints, finding that none of the plaintiffs had standing to seek relief. Today, in Lafferty v. Fairfax County School Board, the Supreme Court unanimously affirms. The justices note that a declaratory-judgment action has to involve a specific adverse claim of right and an antagonistic denial of that right. But the juvenile plaintiff expressed only a fear of being disciplined at some point in the future for inadvertently violating the policy, and the adults asserted only taxpayer standing.
That’s not good enough, in either case. The student loses because “general distress over a general policy does not alone allege injury sufficient for standing, even in a declaratory judgment action.” As for the adults … well, if you’ve ever been involved in a taxpayer suit, you know how high that mountain is. The head of the coalition “does not allege any specific injury to her, and zealous interest in this topic alone is not sufficient to create standing.” The parents don’t allege any injury at all; they simply claim that they’re parents of a student.
There’s one last ruling, and it provides a painful lesson in preservation. The plaintiffs assigned error to the circuit court’s decision to refuse them leave to amend. In my view, when a trial court refuses a plaintiff even a single opportunity to amend, that generates a bit of extra appellate scrutiny. But the appellants abandoned this issue – I assume unintentionally – by failing to discuss it in their opening brief. They may have argued it in a reply brief; today’s opinion doesn’t say. But it does hold that if you don’t argue an assignment in your opening brief, the court won’t consider it.
Please note that the justices haven’t weighed in on the merits of the school board’s policy. This is all about a procedural issue, and the court does say that if the student is disciplined at some point for violating the policy, then he will have standing at that point.
Sanctions
Today’s decision in Westlake Legal Group v. Flynn is timely for me; just five days ago I had the honor to address the annual meeting of the Virginia Chapter of the American College of Trial Lawyers, where I spoke on Virginia sanctions jurisprudence. My talk was followed by a judicial panel that included Justice Bernard Goodwyn, who joins today’s unanimous opinion.
The sanctioned party here is (ulp!) a law firm that had (ulp again!) sued its client for payment of legal fees. The initial retainer agreement was quite detailed, and contained a confession-of-judgment provision if the lawyers sought to collect.
The law firm billed the client about $9,000, mailing her a statement. Five weeks later, it sent out another bill for $550. One day after that, one of the lawyers showed up in court and confessed judgment for $9500, plus interest. But the confessed-judgment papers misstated the client’s address, and so when the clerk issued the statutory notice, it was returned by the sheriff undelivered.
Nine months later, the law firm garnished the client’s employer for $12K (this included 18% interest and presumably some attorneys’ fees). There was no problem with the address this time. The client got a new lawyer, who looked into the matter and promptly filed a motion to invalidate the confessed judgment, since the client had never been served.
This evidently caused the original law firm to swallow hard. It moved to nonsuit the collection action. The trial court did that, and more: On the client’s motion, it directed a refund of all garnished moneys, and sanctioned the law firm in the amount of the new lawyer’s fees and costs, some $1,800. The justices granted the law firm a writ to review the sanction order.
The court today affirms. This decision is part merits and part procedural default. The law firm first argued that once it nonsuited, the trial court lost the ability to sanction anybody; the case was over. In fact, the justices today rule that the nonsuit order was of no effect, because by operation of law, “the confessed judgment became void sixty days after its entry … because of failure to serve a certified copy on the client.”
The court instead rules that the act that gave the trial court jurisdiction over the sanctions issue was the filing of the garnishment summons. That clearly was filed without a “reasonable inquiry”; if the law firm had bothered to check the court records, it would have learned that the judgment papers had never been served.
The firm next argued that the trial court abused its discretion in imposing sanctions, but this argument dies quickly when we learn that it was only asserted below in a motion to reconsider, filed on the 19th day after the sanction order. Predictably, the trial court never acted upon that, so under Brandon v. Cox, the issue passes unnoticed on appeal. The justices also speedily dispatch a claim that the fee claim was unsubstantiated, noting that the new attorney submitted an affidavit with his bills.
There’s one further issue that’s worth noting, even though the court doesn’t formally decide it: Do confessed-judgment procedures apply to contracts like this at all? A footnote in today’s opinion broadly hints that it doesn’t; CJ procedures are for existing debt, not the future provision of services. In theory, this remains an unresolved issue in Virginia, but I wouldn’t want to be the lawyer who urges an argument like that in the Supreme Court for the first time.
Medical malpractice
Toraish v. Lee is the tragic tale of a five-year-old boy who died at home a few hours after outpatient surgery to remove his tonsils and adenoids. His estate alleged that the doctor should have ordered that he be monitored overnight because of a history of severe apnea. When his mother went to check on him after giving him directed medication, his breathing and heart had stopped. The plaintiff’s theory was that the death was due to a fatal interruption in the boy’s breathing.
At trial, the defendant doctor called on a geneticist who opined that the boy’s death was unrelated to breathing issues but was instead due to a genetic disorder. In order to reach that conclusion, the doctor performed a differential diagnosis, whereby he ruled out one potential cause after another until only one cause remained. On cross-examination, when asked about a breathing cause, he responded that he couldn’t discuss that because it was out of his area of expertise.
The defendant doctor also testified, but he did so as a lay witness, not as an expert. He stated over objection that if he had known of two risk factors, he would not have operated on the boy, but would have sent him off to a children’s hospital for care.
A jury returned a defense verdict, but the boy’s mother, as personal representative, got a writ to review the two issues mentioned above. The court today reverses on the first one, finding that the geneticist’s opinion lacked an adequate foundation because he could not account for all of the relevant variables. The defense contended that the geneticist had relied on other experts to rule out a respiratory cause: the medical examiner and a pulmonologist. But the ME was unable to determine a precise cause of death, ruling that it was a case of “cardiac arrhythmias of unknown etiology.”
As for the pulmonologist, the defendant doctor raised this issue for the first time during oral argument on appeal; his briefs never mentioned it and the appendix didn’t contain any evidence relating to him. The Supreme Court points out that the geneticist couldn’t have relied on the pulmonologist’s testimony because that testimony came two months after the geneticist’s report.
On the second issue, the justices agree with the defense. The mother had argued that this what-would-you-have-done testimony was actually an undisclosed opinion from a non-expert. Preexisting Virginia law forbids lay witnesses from answering hypothetical questions. But the justices rule today that this kind of testimony from the treating doctor isn’t in the nature of an opinion; it’s explaining what he did, and why. The court sends the case back for a new trial, in which the defendant can offer his testimony again, but the geneticist is out.
Sureties
The day’s shortest opinion – I’m always grateful for those – comes from Senior Justice Russell, who writes for a unanimous court in Chamberlain v. Marshall Auto & Truck Center. It presents a direct question that, surprisingly, may not have been directly answered in previous Supreme Court decisions. Where an accommodation surety has to pay because his principal has defaulted, may the surety recover his losses from the principal?
This opinion notes the difference between accommodation sureties and compensated sureties. As you might expect from the name, compensated sureties charge for their services; accommodation sureties don’t. The latter type usually cosign a loan in order to help someone else out, basing the decision on the goodness of their hearts. As a result, an accommodation surety “has always been one of the favorites of the law.”
This case presents the always dangerous intersection of love and business. Chamberlain was in a romantic relationship with the woman who owned Marshall Auto, and when she needed a cosigner for a business loan, he was happy to lend his name. The company borrowed $950,000 from a bank, and Chamberlain signed a guaranty of the loan.
Love eventually faded, but Chamberlain’s name remained on the loan. When Marshall Auto fell about $50K behind in payments, the bank debited Chamberlain’s account to bring it current. Chamberlain sued his ex-lover’s company to recover his losses. The company’s defense included the assertion that, as an accommodation surety, Chamberlain couldn’t recover because the guaranty was a gift.
The trial court agreed and entered judgment for Marshall Auto, but today the justices reverse. The statute governing sureties provides that they may recover their losses from their principals, and it doesn’t separate compensated and accommodation sureties. The court remands the case for a calculation of how much the company owes to Chamberlain.
Criminal law
The justices take up the definition of carjacking today in Hilton v. Commonwealth. It’s a straightforward issue: Can a robber be convicted of carjacking if he takes the keys from the owner, but never actually seizes the vehicle?
The language of the criminal statute furnishes the answer: Carjacking is “the intentional seizure or seizure of control of a motor vehicle of another with intent to permanently or temporarily deprive another in possession or control of the vehicle of that possession or control by [among other listed violent or threatening acts] the threat or presenting of firearms ….” I’ve italicized the case-dispositive language. Justice McClanahan’s opinion explains that Hilton pulled a gun on a truck’s owner and threatened to shoot him. He took the keys from the victim’s pocket. That’s enough to seize control of the truck because, as she points out, “At that point, the victim was not free to get back into his truck, much less drive it.”
Folks, it’s hard to argue with this logic. The fact that Hilton never actually got into the truck is immaterial. (Hilton evidently never planned to steal the truck, but he had acquired $2,700 out of the victim’s pockets, and planned to run away with that.) The court thus affirms Hilton’s conviction and what I assume is a substantial period of free room and board with the compliments of the Director of Corrections.
I can’t resist one more observation. It’s in the realm of stupid-criminal stories that I hold dear. I’ll preface this note by acknowledging that carjacking isn’t funny at all; it’s a serious and violent crime, and I have no doubt that the victim feared for his life at the time. But he must have been quietly pleased when Hilton ordered him back into the truck, presumably so Hilton could run away. The victim happily complied, at which point he grabbed the shotgun he had stashed there and confronted a surprised Hilton with it.
Attorney’s fees
I will assume that I have your full attention, as attorney’s fees is one of the sweetest two-word phrases in the English language. (Game Seven is right up there.) Today’s opinion from Justice Mims in Lambert v. Sea Oats Condominium Ass’n offers a wealth of guidance to trial courts evaluating fee requests.
The setup is simple: Lambert had to repair a door outside her condo unit. Claiming that the door was a common element, and thus the association’s responsibility, she sued to recover the $500 she had spent. (For those who are condo-law-challenged, if it had been an interior door, it would have been a limited common element, and Lambert’s responsibility.)
The case started in GDC, where the association won. Lambert appealed to circuit court and had better luck; the learned judge ruled in her favor (quite correctly, based on what I recall of condo law). Her lawyer then presented a fee petition, since the statute that allows this kind of suit mandates an award of reasonable fees for the victor. The petition claimed about $8,000 in fees – hardly a surprising amount for handling a circuit-court trial.
And yet the judge balked. Eight thousand bucks to litigate a $500 claim? There wasn’t anything wrong with the claim, and the judge took pains to compliment the lawyer on the quality of his advocacy for his client. But he reasoned that the amount at stake in the case made a fee request that large unsupportable. He entered judgment for the $500 plus $375 in fees.
Lambert headed to Richmond, seeking the full amount of her fees. Today, in an opinion that has a little bit of everything in this field, the Supreme Court reverses.
The fundamental question here is what constitutes a reasonable fee for a case like this. The defense argued that throwing a lot of legal time and talent into a $500 case is a tremendous waste of resources; fees should be commensurate to the amount in issue. The plaintiff answered that the statute provides for – even mandates – fees for a successful litigant, and truncating those fees would thwart litigants who seek to vindicate the legislative purpose.
The justices rule today that a court may indeed consider the amount in issue in setting the amount of fees. The court looks to fiduciary litigation for comparison, and rules that that body of jurisprudence may as well provide guidance in this decision.
Next, the court notes that while it’s possible to measure a litigant’s success by comparing the ultimate result with what was sued for, that can produce skewed results. Virginia law encourages plaintiffs to overstate their ad damnum clauses when they seek unliquidated damages, because you can never get more than you sue for. But when a plaintiff goes overboard, suing for gazillions in damages for, say, a bad haircut, that tends to escalate the litigation. The defense has to treat a multi-gazillion-dollar lawsuit seriously, right?
The justices today rule that a trial court can consider the litigant’s degree of success, though it hastens to add, “We are not establishing a rule that in every case where a plaintiff recovers less than all of the damages sought, he or she may not recover all of the attorney’s fees reasonably incurred in the case.” The judge is supposed to consider how effective the lawyer’s services were for the client.
The problem with the circuit court’s decision was that it used the amount in controversy to serve as a hard ceiling for the fee recovery. While few (if any) among this set of justices have uttered the phrase, “May it please the court; ladies and gentlemen of the jury …” in the Twenty-First Century, modern practicalities have not escaped them: “Circuit court litigation comes at a price, sometimes a heavy price.” The court knows that it costs a lot to litigate a case, particularly with an experienced lawyer. And when you win your case, the statute mandates a fee award. The Supreme Court today rules that that fee award should be meaningful.
There’s one more ruling today, and the defense will be kicking itself over it. Lambert’s lawyer waited until closing argument before saying, “And one more thing: We’re asking for attorney’s fees, and here are my billing records.” Technically, that’s too late; under Lee v. Mulford, that’s part of the plaintiff’s case in chief, and Lambert had rested quite a while back. Lee holds that you can’t simply assume that a fee claim is automatically bifurcated; absent an agreement or ruling to that effect, you have to introduce evidence of your fee claim before you rest.
In response, the association “then made its closing argument. It did not object to Lambert’s request for an award of attorney’s fees. It did not object to the affidavit when Lambert supplied it or when the court said it would mark the affidavit as filed.” That’s what we call a waiver of an otherwise meritorious argument. In a subsequent brief, the association argued that the fee request came too late, but by then the court had established a separate fee-claim procedure under Rule 3:25.
The association also claimed that Lambert hadn’t sought a specific amount of legal fees, so she couldn’t recover any. After all, Rule 3:2(c)(ii) requires that you set out in your ad damnum clause a specific dollar amount of damages that you claim. The justices reject this argument, noting that at the outset of the litigation, it’s impossible to know how much your fees will be. After all, you don’t know whether your opponent will roll over readily, or fight you for every inch of ground. Today’s holding means that a litigant merely has to plead a claim for attorney’s fees, without specifying an amount.
The Supreme Court also invokes the sweetest three-word phrase in the English language: appellate attorney’s fees. The court remands the case for a suitable award of fees for both the trial and the appeal. That $500 claim is getting expensive; the association now wishes it had just paid it immediately.
Property owners’ associations
Poor Justice Mims; he drew the short straw and had to write up Shepherd v. Conde, an appeal involving neighboring owners in a small development in Fauquier County. If you envision that appellate jurists spend all of their time on sexy appeals involving important constitutional questions or razzle-dazzle principles, this case will cure you.
The comforting news is that his honor does a terrific job of molding this decidedly unsexy raw material into a set of understandable rulings. But the holdings in this case will largely be of interest to property-law jocks; they largely turn on the unique language of a declaration of protective covenants and restrictions. Because I love you, my dear readers, I’m going to truncate the facts and the issues a bit in order to get you right to the rulings.
A realty company recorded that declaration back in 1988, and in my humble opinion, blew it royally. The declaration covers six lots just east of Warrenton, and it creates an architectural review committee, but not a property owners’ association. The six properties are owned by six families who apparently live there.
A generation later, in 2014, five of the six owners signed an amended and restated declaration; a second amendment, signed by the same five, came a few months later. The amendments purported to create an association and authorized it to make assessments for the maintenance of common areas – presumably the street that serves all six properties. The one holdout family sued, seeking a declaration that there was no valid association and that no assessments could be made against them. The other five owners filed a counterclaim.
The trial court eventually ruled in favor of the holdouts, but today the justices give the majority families at least a partial victory. Here are the key rulings:
The declaration did not, in fact, create the association. That’s from the plain language of the 1988 document.
But the architectural review committee qualifies as a POA, and the 5/6 majority was sufficient to empower it to act. That’s based on the unique language of the original document.
The new association does not, however, qualify as a true POA. Even the amendments gave powers to the architectural committee, not to the association. And that committee’s powers don’t allow assessments for plain-vanilla maintenance; just for damage caused by one of the owners.
Now, it’s conceivable that, armed with this ruling, the five-family majority might now try to amend yet again to give the committee power to assess for maintenance. Anything’s possible when neighbors draw up plans of battle and head to court. It is here that I offer a silent prayer of thanks for the fact that my neighbors here in tranquil Virginia Beach are terrific; we all get along famously.
There’s one final note that caught my eye. What follows here is largely a product of my effort to read between the lines. I am necessarily drawing inferences about which I may be mistaken, so I won’t offer any concrete diagnoses; I’ll explain the basis for those inferences below.
Early in the opinion, Justice Mims notes that the second amendment claims that “the Association was created by the Declaration.” There’s a footnote at this point that begins with a short but volcanic statement: “This assertion is false.”
We’re in the realm of appellate jurisprudence, where the writers are temperate and the language is carefully chosen; appellate jurists don’t fire off nastygrams the way lawyers do all too often, and the way some trial judges sometimes do. In this realm, I would have expected a different closing word to this sentence: “This assertion is mistaken.” “This assertion is inaccurate.” “This assertion is contradicted by the document itself.”
I find the word false in this context to be a stunning insertion. The continuation of the footnote telegraphs what I believe to be judicial resentment:
There is no mention of the Association in the Declaration. To the contrary, the Declaration is clear that the Committee has “full authority” to enforce it. The defendants have relied on this false assertion as the foundation for some of their arguments, in both their trial pleadings and their appellate briefs. We therefore must acknowledge it where it appears, but we will not allow it to affect our analysis.
This note stops short of using the L-word in referring to the defendants and their lawyers; nor does it use that word’s D-word cousin (judges hate seeing the word disingenuous in a pleading or brief, because we all know it’s a synonym for lying). But I suspect that the court has concluded that the defendants are playing footsie with the facts, a cardinal sin in any courtroom, but especially a courtroom that you might reenter someday in another case.
If I’m right in drawing this inference, then the lawyers who filed the briefs with these “false” statements will have burned some priceless credibility, and cannot readily get it back.
Implied consent
Back in the 1990s when I worked in City Hall and occasionally prosecuted DUI cases, I learned that one of the key differences between a DUI charge and its common companion on the docket, unreasonable refusal, was where the offense could take place. You can be convicted of DUI if you’re operating a vehicle anywhere in the Commonwealth, including on your front lawn. But a refusal charge requires operation on a highway. This distinction is the heart of Kim v. Commonwealth.
Tipped off by a tow-truck driver for a private apartment complex, a Fairfax police officer entered the apartment premises and found a car parked half in a parking space, half on a grass median. The engine was running, the lights and radio were on, and there was a guy fast asleep in the front seat.
I can imagine what happened then: our hero, Kim, had the unpleasant experience of being awakened at 4:30 a.m. by a police officer holding a flashlight. The officer noted some of the classic signs of DUI and asked the man to perform some field sobriety tests. He began by failing at least one, when this happened:
However, despite having spoken English for the previous five minutes, when Officer Cash attempted to administer the tests, Kim stated that he did not speak English. Kim then refused to undertake any further field sobriety tests, including a preliminary breath test. Kim was arrested on suspicion of drunk driving and taken to the police station for the administration of a breath test.
Well, now. This is a fine time to try the ol’ no-speakada-English trick. It didn’t work, of course; and at the station, Kim’s linguistic talent suddenly returned after he received the refusal warning: “this is just a stupid DUI,” he said; “I will be out in the morning.”
Maybe so, but when he left in the morning he was clutching warrants for DUI and refusal.
The issue at the refusal trial – the DUI charge isn’t at issue in this appeal – was whether Kim had operated a car on a highway, thus triggering the implied-consent statute. The trial judge received plenty of evidence and even more argument on the point before concluding that the privately owned streets in the apartment complex were nevertheless within the parameters of a highway. The court suspended Kim’s license for a year, the standard result of a refusal finding.
On appeal, Kim again argued that the street was private and not a highway open to unrestricted travel by the public. This case generates today’s only dissenting opinion; by a margin of 4-3, the justices reverse and dismiss the charge. Justice Powell, writing for Justices Goodwyn, Mims, and McCullough, concludes that the presence of “Parking by Permit Only” signs at each entrance to the apartment complex meant that the public was not entitled to unfettered access to the interior streets.
Justice Kelsey pens a dissent on behalf of the chief justice and Justice McClanahan. He notes that the signs at the entrances forbade only parking; not driving through the streets. And while there was a “No Trespassing” sign on the premises, it wasn’t angled toward drivers but pedestrians walking on one of the sidewalks. The dissent believes that the trial court had to make a factual finding of whether this was a street that the public could transit, and the Supreme Court should defer to that finding.
At first when I read this opinion, I concluded that the majority was right; this is private property. But upon reflection, I tend to side with the dissenters. There are public streets at each entrance to the complex, and I can readily see a driver’s deciding to take a shortcut by driving through the perfectly open streets – there are no barriers or security guards to stop cars – in order to get back to the public streets and reach a destination outside the complex. Whether the street is privately owned isn’t the dispositive factor; it’s whether unrestricted access exists. And yes, I can see a judge’s making that finding under the circumstances of this set of signs.
So will this decision cause apartment complexes across the Commonwealth to revise their signs? I doubt it; their interest in things like refusal charges is slim enough to make the expense of the change unnecessary. But this ruling will foreseeably affect refusal prosecutions everywhere; you need to know about this case if you’re representing a similar client in court next week.
Insurance
The last opinion of the day – well, only if you line them up that way – is Nationwide Mutual Fire Insurance v. Erie Insurance Exchange. This is another DJ action in which two insurers asked the courts to sort out a complex coverage question with a familiar theme: each insurer thinks the other guy’s policy should come first.
The dispute arose out of a wrongful-death claim involving a contractor and one of its subs. The contractor loaned what I assume was a truck to the sub for construction work. An employee of the sub then went out and hit someone while on the job. The victim’s personal rep sued the driver and the contractor, which owned the truck, but eventually nonsuited the contractor. (I presume that was done once the personal rep confirmed that sufficient insurance covered the vehicle, and it would be unnecessary to keep the vehicle’s owner in the case.)
The contractor and the sub each had seven-figure insurance policies, and before long, one of them sued seeking a judicial declaration of which policy came first to pay the estate’s claim. The trial court ruled in favor of the contractor’s insurer, Erie, holding that the order of coverage was (1) Nationwide’s auto policy, (2) Nationwide’s CGL policy; (3) Nationwide’s umbrella; (4) Erie’s auto policy; and (5) Erie’s umbrella.
Today a unanimous Supreme Court revises that ruling significantly. It first rules that the Nationwide CGL policy has nothing to do with this, since it expressly excludes coverage for claims arising from the use of motor vehicles. That policy is discarded.
After that, the news just keeps getting worse for Erie. While the contractor and the sub had agreed in their contract that the sub would indemnify the contractor for liability in the performance of the contract, that agreement applies only to disputes between contractor and sub. Remember, the estate nonsuited the contractor, which owned the car, leaving as the only defendant the driver, who was an employee of the sub. That means that all that indemnity language doesn’t help Erie.
The court settles on the Erie auto policy as providing primary coverage – the first $1 million. After that, Nationwide’s auto policy gets the next million.
That leaves two umbrella policies. As often happens, each policy contains other-insurance language, stating that all other insurance has to be exhausted first. The insurers are now in a stare-down, with neither one budging.
The justices have a simple solution to this conundrum. They won’t allow this language to defeat insurance. Instead, the courts direct pro rata distribution of coverage. Since Nationwide has a $1 million umbrella covering the sub, and Erie has a $5 million policy covering the contractor, any liability over the first $2 million (the sum of the two auto policies) will be assigned 5/6 to Erie and 1/6 to Nationwide.
There; that wasn’t hard, was it?
