ANALYSIS OF APRIL 14, 2022 SUPREME COURT OPINIONS

(Posted April 14, 2022) Harvey Penick, the author of the celebrated collection of golf instruction entitled, Harvey Penick’s Little Red Book, once aspired to play professional golf. As he tells the tale, he entered a tournament and on the first day of competition, went to the registration table to check in. After doing so, he went over to the practice range to get ready for his round.

There, he passed by Sam Snead’s practice station. The greatest Virginia golfer of all time was already in his warmup session. Penick paused to watch as Snead launched a series of beautiful four-iron shots that soared majestically off into the distance. After a few minutes, Penick turned around, walked back to the registration table, and withdrew from the tournament, reckoning that he could never compete against a golfer of Snead’s skill.

In a separate genre, a Scottish guitarist named Ian Anderson was eager to make a name for himself in the 1960s rock genre. He practiced and played in clubs, fancying that a profitable career might await him. Then one day, he heard Eric Clapton play. That was enough to convince him that he could never thrive as a guitarist; Clapton’s genius at the instrument greatly exceeded Anderson’s.

But each story has a happy ending. After jettisoning the idea of a career as a Tour pro, Penick turned to teaching. He went on to become the most famous golf teacher of the Twentieth Century, providing gentle, effective guidance to young golfers who would become major stars on the PGA Tour. After abandoning the guitar as a primary instrument, Anderson saw a shiny object in the window as he passed a music store, and decided to give the flute a try. The result, the eventual development of Jethro Tull, changed rock history, adding a new sound that dazzled audiences around the world.

These parallel tales have nothing to do with this morning’s two published opinions from the Supreme Court of Virginia. But they teach that, no matter how frustrated you might be, you can always choose to adapt and thrive. Both Penick and Anderson achieved far more success in their altered careers than they probably would have if they had stubbornly clung to their initial plans. Keep this in mind in your life, and remember that you’re never trapped as long as you have imagination.

Insurance

We get two rulings – one procedural; the other substantive – in Erie Insurance Exchange v. Jones. This arises from a declaratory-judgment action on a homeowner’s policy. The underlying claim stems from an injury sustained by a girl who was a passenger on a four-wheel all-terrain vehicle. The girl’s mother sued the parents of the driver. Erie disavowed coverage, so the mother filed the DJ action.

Because this is a homeowner’s policy and not a vehicular policy, it contains an exclusion for claims arising from the use of motor vehicles. The issue in this appeal is whether either of two exceptions to that exclusion applies. The first is for recreational land motor vehicles “not designed for use on public roads while at the insured location.” The other provides that “lawn or farm type vehicles” get coverage.

This injury happened off the homeowners’ property, so the first exception didn’t apply. Today, the Supreme Court ponders whether an ATV is a farm-type vehicle. The circuit court found the language ambiguous, because the policy didn’t define farm-type vehicle. Resolving the ambiguity against the insurer, that court ruled that the insurer was liable to cover the claim.

The justices disagree. In a short opinion from the pen of Justice McCullough, the court rules as a matter of law that an ATV, while it may be used on a farm, still isn’t a farm-type vehicle. That clearly isn’t the ATV’s primary purpose, so there’s no coverage.

The procedural ruling stems from the mother’s request that the Supreme Court dismiss the appeal because the insurer didn’t name the homeowners – the original defendants in the tort suit – or the injured girl’s guardian ad litem as parties to the appeal. The justices reject this contention, ruling that those litigants aren’t necessary parties. They certainly knew about the appeal, and the mother adequately represented their interest in the appeal because each of them wanted to secure full insurance coverage.

Arbitration

The all-too-familiar specter of an intra-family estate dispute returns to haunt us yet again, this time in Boyle v. Anderson. A man whom we’ll call Dad created an inter vivos trust that directed distribution of the trust property into three shares for his three offspring. He built a mandatory arbitration clause into the trust: “Any dispute that is not amicably resolved, by mediation or otherwise, shall be resolved by arbitration….”

After Dad died, a dispute arose between two of the three branches of beneficiaries. The simplified version is that a son, John, sued to remove his sister, Sarah, from her position as successor trustee. Sarah sought to invoke the arbitration provision, but the circuit court refused to do so.

Arbitration law is one of those areas where certain rights run in one direction only. The Supreme Court (now, starting in 2022, it’s the Court of Appeals) has jurisdiction to hear an appeal of an order that refuses to compel arbitration, though not over an order that compels it. This situation fit, so the justices today take up the primary question whether this trust language forces John to arbitrate.

The short answer is no. The slightly longer answer is that our arbitration statutes require arbitration where there’s (1) a contract containing an arbitration clause, or (2) a written agreement to arbitrate. The court rules today that a trust isn’t a contract; it’s a conveyance. There are several differences between the two in law, and the court refuses to apply contract law to something that isn’t a contract.

As for the agreement trigger, the court finds that the very word agreement requires two parties each to consent to something. Dad may have intended arbitration, but John never agreed to it; he didn’t sign the trust agreement. In the absence of that agreement, the arbitration language isn’t enforceable against him.

The court also rules that the Federal Arbitration Act’s provisions similarly apply to contracts, so that statute doesn’t help Sarah either. The justices thus affirm the interlocutory ruling and send the case back for trial.