ANALYSIS OF APRIL 21, 2006 SUPREME COURT OPINIONS
Today, April 21, 2006 , the Supreme Court of Virginia hands down 21 opinions in cases that were argued during the March session. A few notes about today’s holdings:
- It was a good day for criminal defendants, who won reversals in four of five cases, including one divorce court bypass;
- Even in the civil context, appellees got bludgeoned, suffering nine outright reversals and three partial reversals in 15 cases (excluding the one certified question case);
- There were two appeals involving the rarely used provision in Code §17.1-410(B), for further review of cases in which the Court of Appeals is otherwise the court of last resort;
- We see the end of a long standing defense in malicious prosecution cases;
- The court revises last year’s ruling in a tort case to eliminate the requirement that damages spring from emotional causes be measured against a hypothetical person of normal sensibilities, thus preserving the thin-skulled plaintiff rule for such damages;
- All but one of the decisions are unanimous, a remarkable degree of consensus even for this court;
- A total of three statute of limitations decisions arrive; and
- We see the final opinion from a respected justice who served on the court for over thirty years.
The Supreme Court issues this morning a new opinion in Kondaurov v. Kerdasha, a case originally decided in September, but withdrawn upon the grant of a petition for rehearing. Today’s opinion reverses the judgment in favor of the plaintiff, as the previous ruling had done, and remands for proceedings on the issue of damages alone.
I have discussed this case previously here (scroll down to the Torts section), and will not repeat the factual scenario. Today’s opinion addresses one issue not previously discussed, that of waiver, and omits one holding that had caused a wave of controversy in September.
The waiver issue relates to the plaintiff’s contention that the defendants had not preserved their objection at trial, since they allowed certain evidence to be introduced relating to what happened in this horrific collision, without objecting to it. The plaintiff contended that she suffered debilitating physical injuries due to her emotional distress over the fate of her beloved dog, which was injured in the collision and lost for a day. She was permitted to testify, without objection, what had happened to the dog during the collision, and what she had suffered as a result. When she rested, the defense made a motion to strike that portion of the claim that originated from damages arising out of the unknown fate of the dog. The trial court denied that motion.
Today, the court holds that this motion to strike was sufficient to preserve the issue for appeal. Testimony as to what happened to the dog during the collision was relevant to show the force of the collision, so it was not of itself objectionable. The proper way to address an objection to the use of the evidence for damage purposes, the court rules, is by a motion to strike. This is an important ruling on the always-tricky question of how to preserve issues for appeal, and warrants careful study for that purpose.
September’s opinion also included a holding that the plaintiff’s emotional damages should have been measured against those that would have been suffered by a person of normal sensitivities (this plaintiff suffered from multiple sclerosis, which made her more susceptible to emotional trauma than other persons). This ruling, which would have made most personal injury trials far more complicated, is noticeably absent from today’s ruling. The court does reaffirm that one may not recover emotional damages for the loss of personalty, and companion animals are, under well-established caselaw, personalty. Upon retrial, the jury will be instructed accordingly.
Tort practitioners who handle malicious prosecution cases know the four elements of those claims. A plaintiff must show that the prosecution was (1) malicious; (2) instituted by or at the behest of the defendant; (3) without probable cause; and (4) terminated not unfavorably to the plaintiff. Those lawyers have lived for some time with the doctrine that a lower court conviction, even if ultimately reversed, furnished conclusive proof of probable cause.
Today, they get to change their manner of thinking on this doctrine; today’s decision in Baker v. Elmendorf signals a major shift in this area of the law, although it’s one that has been a long time developing.
Mr. and Mrs. Elmendorf managed to get Baker charged with stalking. He was convicted in general district court, but appealed. He had better luck in circuit, where he was acquitted. He filed a malicious prosecution suit against them, seeking as damages the $33,000 he had spent in defending the criminal charges. The Elmendorfs defended in part by claiming that the charges against Baker were obviously supported by probable cause, since he had been convicted below. They cited Ricketts v. McCrory Co., 138 Va. 548 (1924) for this seemingly unassailable defense.
While the court’s opinion today doesn’t come right out and say it, I’ll say it: The Ricketts doctrine is dead; burial will be private. Today the court rules that when a defendant exercises his right to a de novo appeal, that appeal wipes out all aspects of the lower court proceedings. And that includes any preclusive effect of its findings on the question of probable cause.
This decision comes not from the fact that the Supreme Court of Virginia has suddenly become an activist court. It reflects some statutory changes in the 80-plus years since Ricketts was handed down, plus rulings in other Supreme Court cases in the intervening decades. When the defendant gets a de novo trial, that de novo aspect applies to the ensuing circuit court criminal trial (where, for example, the fact of the previous conviction cannot be introduced into evidence), and in civil proceedings on the same subject matter. This ruling injects new life into the field of malicious prosecution law, although I believe it would be a mistake to predict an explosion of new cases now.
The court also hands down an opinion relating to the second cousin of malicious prosecution, namely abuse of process. This ruling is Montgomery v. McDaniel. Montgomery and her daughter both worked for McDaniel at the latter’s laser skin care center in Tidewater. The daughter charged her boss with sexual harassment and assault. She made this charge to the company’s CFO, who then confronted McDaniel (who was also HIS boss) with the allegations.
The CFO must have been a very persuasive man. He convinced his boss to discipline himself, signing an agreement relieving him of his duties and forbidding him from contacting any employees. That truce lasted about a month before McDaniel apparently decided he had had enough of staying away from his own bloody company; he returned, metaphorically tore up the agreement, and placed the CFO and three others on administrative leave.
Given this apparent breach of the agreement, the daughter filed a lawsuit against McDaniel and the company, seeking damages for the assault and a lot of other things. McDaniel fired a salvo of his own, launching a third-party cross-bill against, among others, the CFO and Montgomery . He sought $3 million plus in damages. The litigation mushroomed at this point, with loads of claimants filing lots of charges, most of them against McDaniel.
At this point, McDaniel’s case started to run out of gas, if it ever had any; he started peeling off defendants, some by nonsuit, others by dismissal with prejudice. He saved Montgomery and her daughter for last, eventually nonsuiting them. That left the threat of a refiled action, and that threat led Montgomery to sue McDaniel for abuse of process.
Montgomery claimed in her suit that McDaniel was holding a refiled action over her head in order to use that as leverage against her daughter, who ostensibly had a meritorious assault claim against the boss. She asserted that McDaniel was trying to pressure the daughter into dropping the suit by threatening to reinstitute the $3 million claims, subjecting the mother to harassment.
Abuse of process claims require proof of (1) an ulterior motive and (2) “an act in the use of the process not proper in the regular prosecution of the proceedings.” The Supreme Court, in affirming the trial court’s ruling, today holds that the mere nonsuit of a case cannot satisfy the second prong, since that’s a right given to every plaintiff by the General Assembly. The court notes that there were other allegations in McDaniel’s suit that were not facially frivolous, and those could have served as the basis for the issuance and service of the process in this case. The court leaves for another day the question of whether the failure to dismiss with prejudice, assuming that’s somehow improper, is not an act but a failure to act.
This ruling is not unanimous. Justice Lemons, joined by the Chief Justice, dissents, pointing to an instance of discovery abuse by McDaniel as such an improper act in the course of the proceedings as could justify liability here. Attorneys dealing with discovery motions (that is to say, virtually every lawyer who ever steps into a courtroom) will find his discussion both interesting and citeworthy in addressing matters unrelated to abuse of process.
The court breaks some new ground in the area of defensive pleading in the medical malpractice case of Monahan v. Obici Medical Management Services. Monahan came to the Wakefield Medical Center with several symptoms that called for at least some medical attention – he was hot and sweaty, unsteady on his feet, and said that he felt unwell. He had a blood pressure of 200 over 95, which most of you will recognize is not good. He saw a nurse practitioner, who diagnosed him conservatively; she gave him some pills and suggested that he go home and rest, and to return if his condition did not improve.
A few minutes later, the person who had brought Monahan to the center returned and asked the nurse to see Monahan again, she went outside and saw him leaning against the building. The evidence diverges as to that course of their conversation; the nurse stated that she urged him to go to an emergency room, while Monahan stated that he could not recall that. The nurse stated that when she made her suggestion, Monahan said nothing, which she interpreted as a refusal. She also offered him the choice of going home to rest, which he did.
Shortly thereafter, his wife found him after he fell out of bed. She elected to take him to Riverside Hospital in Newport News . Riverside was not the closest hospital to the Monahan residence, but Mrs. Monahan worked there and knew the hospital and its staff. She declined to stop at a rescue squad on the way. The trip to Riverside took perhaps 20 minutes longer than would a trip to the nearest hospital (Obici in Suffolk ). On the way to the hospital, Monahan suffered a stroke that left him disabled. He sued the center for medical malpractice.
At trial, the center offered a jury instruction on mitigation of damages, arguing to the jury that, among other things, the decision to drive to Riverside constituted a failure to mitigate. Monahan objected that the center had not pleaded mitigation, and besides, there was no evidence to support such an instruction. The trial court agreed with the center and gave the instruction. The jury returned a verdict for Monahan for $215,000; he appealed.
Today, the Supreme Court affirms in part and reverses in part. In case you think that’s a mixed bag for the litigants, I’ll spoil the surprise by telling you that Monahan gets just about all the goodies in this opinion.
The one issue on which the center prevailed is an issue of first impression, although that may surprise a lot of lawyers; it finds that the failure to plead mitigation does not constitute a waiver of that defense. The court acknowledges that mitigation is an affirmative defense, and that those defenses usually have to be pleaded or they’re waived. But it notes that no statute or rule requires that it be pleaded. It points out that mitigation, unlike other affirmative defenses that may act as a bar to the entire case, does not entitle the defendant to judgment; it can only lessen the sting of the case. The clincher here is the rule on defaulting defendants (current Rule 3:19 ) does not prevent a defendant who has not answered at all from offering mitigation evidence. That means that it cannot be waived by the failure to plead it.
Unfortunately for the center, there still has to be some evidence to back it up, or no jury instruction may be given. And here, there was nothing in the evidence that established that the decision to go to another hospital caused any of Monahan’s injuries. The center certainly argued as much, but conceded that none of its testimony causally linked the stroke to the decision to drive a greater distance.
The result of all this is that Monahan gets a new trial. But he will have an easier time of it the next time he heads for the courthouse, and not just because of these rulings; the court notes that the center did not assign cross-error to the trial court’s finding of liability. That means, under the law of the case doctrine and related caselaw, the center’s liability is established, and the new trial will be on the issue of damages only. It remains to be seen whether Monahan can bring in a larger verdict this time around, but he’s holding all the high cards now.
The final tort case of the day is Ogunde v. Commonwealth, a tort claim brought by an inmate at a state prison. Ogunde suffered an injury in prison, allegedly due to the negligence of a corrections officer, and followed the prison grievance procedure for such claims. At some point thereafter, he filed suit in circuit court under the Virginia Tort Claims Act. The Commonwealth defended by asserting, among other things, that the suit was not timely filed under a statute of limitations that appears outside the Tort Claims Act, but governs “any personal action [filed by an inmate] relating to the conditions of his confinement.” Code §8.01-243.2.
The suit was clearly timely untimely if this statute applies, but it was equally clearly filed in time if the more generous statute of limitations contained in the Tort Claims Act applies. Today the court rules that the Tort Claims Act is a self-contained body of law, and its statute of limitations governs over the extrinsic statute quoted above. In doing so, it finds that if the Commonwealth’s interpretation is correct, the 1998 enactment of the quoted section would implicitly repeal certain provisions in the Tort Claims Act, without ever mentioning it. It pointed to a decision from the January 2006 session of the court in which such implicit repeal is viewed with disfavor.
Ogunde is the last opinion authored by Justice A. Christian Compton, who died twelve days before this decision was handed down.
Today provides the denouement to the City of Chesapeake ’s water saga. In a previous suit, 213 women sued in a multiple claimant action against the City, asserting that pollutants in the municipal water supply caused them to miscarry. The City won that case in a previous trip to the Supreme Court in 2004, persuading that court that it was immune from liability. That was a costly victory, however; the City got a legal bill for $2.4 million. At that point, it did what any of us might do – it turned the bill over to its insurer.
The insurer handed it right back, asserting that an exclusion in the policy applied, withholding coverage for claims of the discharge of pollutants. The City filed a declaratory judgment suit, seeking imposition of coverage to pay that whopping legal bill (which, it must be conceded, was for a whopping case). The United States District Court for the Eastern District of Virginia certified to the Supreme Court of Virginia the question of whether the pollution exclusion applies.
Today, to the City’s chagrin, the court finds that it does. In City of Chesapeake v. States Self-Insurers Risk Retention Group, it applies the definitions section of the policy to identify the leaked chemicals (known as THM’s) as pollutants under the policy; it further finds that the underlying suit alleged that the City “discharged” the pollutants into the water supply. That triggers the exclusion, and means that the taxpayers of Chesapeake , not an insurance cooperative, will have to foot that legal bill.
In case the lesson of this case isn’t clear, you should review insurance policies carefully, no matter how much legalese there is, to determine just how much coverage, and reciprocally how much leakage, you have. This is also a lesson learned recently the hard way by many Gulf Coast victims of Hurricane Katrina, who found their homeowners insurance policies essentially useless to them because they contained a flood exclusion.
The court decides five criminal appeals today; the longest of these (at 32 pages) is Orndorff v. Commonwealth, involving a conviction for second degree murder and a companion firearm charge.
Mrs. Orndorff’s marriage ended when her husband died of lead poisoning — .38 caliber. (This is what is known in the law as a “Smith & Wesson divorce.”) She was convicted in the shooting death; there was conflicting evidence of whether the couple had been experiencing marital problems. She made a frantic 911 call one evening, saying that she had just shot her husband as he approached he with a knife and a baseball bat. Her conversation with the dispatcher was alternatively calm and frantic. When police arrived, they found the husband’s body lying in the kitchen, with a knife and a baseball bat lying in what they deemed suspiciously perfect position. The husband also had the misfortune of having received five gunshot wounds.
The issue in this case relates to Orndorff’s post-trial motion for a new trial, based on her medical experts’ conclusion, reached for the first time after the guilt verdict, that she suffered from dissociative identity disorder (DID). That triggered analysis under the four part test in Odum v. Commonwealth, 225 Va. 123 (1983). Those four parts are: (1) discovery of evidence after trial; (2) unavailability of the evidence before trial by reasonable diligence; (3) that the new evidence not be cumulative or corroborative; and (4) the new evidence is material, such that it would lead to a different result on a retrial.
The Commonwealth conceded parts (1) and (3). The court today deals with (2) and (4), in the wake of an en banc Court of Appeals decision that had affirmed the trial court’s denial of a new trial. The trial court had found that the evidence could have been discovered by reasonable diligence before trial, since the indicators were there; the defendant’s experts simply didn’t diagnose it in time, and that wasn’t due diligence. The Supreme Court reverses this finding today, noting that one key component of the diagnosis didn’t appear until after the guilt verdict, as noted above. It also holds, significantly, that it’s not the experts’ due diligence that is being measured here; it’s the lawyers’. The court specifically finds that the defendant’s lawyers did not have a duty to question their own experts’ findings, such as by hiring additional experts.
That brings the court, and us, to part (4), and this is where the real fight is. The trial court, in evaluating this factor, simply applied the jury’s finding, and held that the evidence would not have produced a different result, since the sentencing jury heard all of the new diagnoses anyway, and still recommended a stiff sentence. Again, the Court of Appeals affirmed the trial court, and again, the Supreme Court reverses today. Today’s ruling emphasizes that the trial judge must make his own determination whether the evidence “is such that it would produce an opposite result on the merits.” It was error to simply rely upon the finding of a jury that had already decided that the defendant was a murderer and a liar.
The court remands the case, directing the trial judge to conduct his own evaluation into whether this evidence would lead to a different result on a new trial. My unscientific view is that this will probably be a Pyhrric victory for Orndorff; demonstrating that new evidence “should produce opposite results on the merits at another trial” is a very difficult standard to meet.
The court next turns to the area of former jeopardy, in Roe v. Commonwealth. There, Roe had been indicted in 2002 for four felonies. When the date for his trial arrived late that year, Roe was a guest of the United States , in custody for unspecified federal offenses. The Commonwealth had not made arrangements for him to be in circuit court. Accordingly, it moved the trial court for a continuance.
And then an unusual thing happened – the trial court said, “No.” It refused the request for a continuance, at which point the Commonwealth moved to dismiss the charges. The trial court granted this motion and entered an order saying as much. The Commonwealth then went to another grand jury and got additional indictment for the same offenses.
Before the trial on these new (or, more aptly, renewed) charges, Roe moved to dismiss them, arguing that the charges had already been dismissed. The trial court examined the record of the previous proceeding and determined that what was actually intended was a nolle prosequi (the criminal cousin of a civil nonsuit), since, he concluded, the previous trial judge did not have the jurisdiction to dismiss with prejudice. He denied Roe’s motion and proceeded with a bench trial. Roe was convicted, and got 13 years of free room and board (with five suspended).
On appeal, a split panel of the Court of Appeals affirmed, finding that the second judge’s interpretation of the first order was reasonable. The Supreme Court granted a writ, and today, it reverses the convictions and enters final judgment in favor of Roe. Applying the very lenient abuse of discretion standard to review the convictions, it nevertheless finds the trial court’s interpretation of the dismissal order to be unreasonable. There is a big difference between a dismissal (which is with prejudice) and a nolle prosequi (which is not). The Commonwealth’s Attorney in the first case, caught in a jam with no defendant and no case, inexplicably moved to dismiss instead of to nolle prosequi. And since a circuit court speaks through its orders, the written order plainly speaks of a dismissal.
One can only wonder whether Roe has more difficult federal problems, but he is relieved of state court criminal liability in this instance.
The court also reverses a conviction and a felony sentence in Welch v. Commonwealth, involving the alleged carnal knowledge by a man of his 14-year-old babysitter. The problem here is that at trial, the babysitter, who evidently had no difficulty expressing herself, testified only that she had “sexual relations” with Welch on twenty or so occasions. She never got around to specifying just what kind of relations they engaged in. Welch, for his part, denied having sexual relations with the babysitter. The babysitter obviously appeared to be more credible; Welch was convicted and sentenced to five years in prison.
The statute that prohibits carnal knowledge of a child lists several specific sexual acts that can serve as the basis for a conviction. See Code §18.2-63(ii). The problem here is that the babysitter never testified that the couple’s “sexual relations” included any of those specific acts. As the court notes today, “There may be a wide range of acts that could be fairly understood by a 14-year-old as sexual in nature, but some of those acts would not be prohibited under the carnal knowledge statute.” And since the Commonwealth bore the burden of proving each element of the charged offense beyond a reasonable doubt, the evidence was insufficient to support a conviction.
The court’s favor also found one person convicted of a misdemeanor, in Spencer v. City of Norfolk. There, Spencer was convicted of reckless driving. She was sentenced to ten days in jail, with the jail term suspended upon her good behavior. The court also imposed a $250 fine. Spencer was seen parked in her driveway by a 12-year-old girl and her babysitter (both of whom were across the street); apparently incensed over something, Spencer leaned on her horn. As the girl entered the street in pursuit of the babysitter’s temporarily loose dog, Spencer backed out and drove toward her. As the girl walked up to a van that was parked along the side of the street, Spencer passed close by her, causing the girl to step back as she “felt the wind coming off [Spencer’s] car.” As far as the reckless driving evidence, that was it.
There is a preliminary jurisdictional issue here: Code §17.1-410 provides that the Court of Appeals is the last available step for defendants convicted of traffic infractions who do not receive jail sentences. (There are exceptions for cases with a “substantial constitutional question” or “matters of significant precedential value”; but Spencer didn’t go there, and neither will we.) Spencer’s jail sentence was suspended in its entirety, and the Commonwealth accordingly moved the Supreme Court to find that it had no jurisdiction to decide the case. In deciding this question, the court notes today that it is the imposition of a jail sentence, not the subsequent suspension of the term, that determines whether the Supreme Court has jurisdiction. Accordingly, the court proceeds to hear and determine the merits of Spencer’s appeal.
That goes well for her; the court has no difficulty in finding that Spencer’s driving, in the light most favorable to the Commonwealth, did not rise to the level of reckless driving. In an opinion that will no doubt be cited endlessly in many a general district court’s traffic division, it holds that Spencer was not driving erratically or out of control; nor did she drive in such a way as to endanger the girl. The girl was aware of the location of the car at all times, and never indicated that she was in fear of being struck. Even her “step back” was because of the wind, not out of fear of being hit. As well, the fact that the girl stood beside a parked van indicated that Spencer was driving in the middle of the road, away from the curb.
The Commonwealth avoids a complete shutout today with the court’s decision in Nobrega v. Commonwealth, where a man was convicted of the statutory rape of his daughter. The girl‘s vaginal area showed no signs of penetration when she came forward (some three years after the events complained of); she had had significant mental disorders over the years. Despite these circumstances, Nobrega was convicted, and his conviction was affirmed in the Court of Appeals.
In the Supreme Court, his principal challenge to his convictions comes from the failure of the trial court to order a psychiatric or psychological evaluation of the child. He believed that an evaluation of her might lead to evidence of her mental problems, which (he asserted) included hallucinations and impulsive behavior. The court holds today that the trial judge did not have the authority to honor the request for such an examination. It notes that such a requirement might have the effect of chilling some victims from reporting these offenses; it points to the enactment of Virginia ’s rape shield law to indicate the public policy of the Commonwealth to encourage such reporting.
The court takes pains to describe today’s decision as very narrow. “We are not called upon to consider the competency of this witness, . . . Nor must we decide whether the trial court should have exercised its discretion to appoint an expert to . . . assist Nobrega in a challenge of the competency of the witness. The sole issue is whether the trial court had the authority to require the complaining witness to be examined by an appropriate mental health expert.” The court answers this question in the negative, and affirms the convictions.
In all, criminal defendants had an extremely successful day in the Supreme Court today. Many trial lawyers (principally criminal defense lawyers) perceive that Virginia ‘s appellate courts are decidedly unfavorable ground for their arguments. While the statistics on reversals are dauntingly small, today’s success rate of 80% (counting Orndorff as a win for the defense, Pyhrric though it may be) demonstrates that this court is not at all averse to vindicating the rights of those who come to it with meritorious causes, even in the criminal field.
Two statute of limitations decisions appear today (in addition to Ogunde, discussed above), the first in the context of a contract for the administration of a standardized test for physical therapists. The American Physical Therapy Association created the test in the 1950’s and administered it for many years. In 1993, it created the Federation of State Boards of Physical Therapy, for the purpose of conveying to the Federation the right to administer the tests. The APTA retained oversight of some aspects of the testing, specifically including the fee charged to applicants. The transfer document included a clause that required the Federation to “establish prices . . . that are generally consistent (taking inflation into account) with prior levels and which are not unduly burdensome to candidates.”
Once you turn financial management over to someone else, the chances are that trouble is brewing somewhere. When the Federation took over in 1993, the fee was $90. Two years later, the Federation hiked it to $185. Presumably the APTA didn’t like that, but it didn’t take any action to stop it. In mid-2000, the price tag went to $285 plus “additional ‘sitting fees.’ ” When the Federation proposed yet another increase, to $350 effective in 2005, the APTA had had enough; it filed suit, claiming that these actions were in breach of the contract.
But the Federation’s lawyers figured that the suit came too late. They filed a special plea, asserting that the cause of action, such as it was, arose with the first such breach. They cited Westminster Investing Corp. v. Lamps Unltd., 237 Va. 543 (1989), in which the court had held that a landlord’s continuing breach of lease terms produced a single cause of action with a single accrual date.
If you’re the APTA, this is a problem; the statute for written contracts is five years, and if it accrued back in 1995, with the first price hike, then APTA would be out of court in a hurry. Its lawyers asked the trial court to find that this was a discrete series of breaches, such as the circumstances in HRSD v. McDonnell, 234 Va. 235 (1987), involving intermittent sewage discharges onto private property. In that case, the Supreme Court had determined that separate causes of action existed. That doctrine would at least enable the APTA to challenge the 2000 and 2005 rate hikes (the latter was, in fact, imposed).
The trial court sided with the Federation; it sustained the special plea and dismissed the case. On appeal, the APTA found a friendlier welcome; the Supreme Court today reverses, in APTA v. Federation of State Boards, finding that “the Federation’s actions constituted distinct, separate breaches of the Agreement.” While the 1995 price hike is out of reach, the APTA will still get to challenge the more recent ones on remand.
The other statute of limitations case arises in the dangerous minefield of suretyship law. In 1994, a new restaurant, Havana ’59, opened in Richmond . The restaurant leased equipment from United Leasing Company, which received, in addition to the restaurant’s promise to pay, guaranties from two surety companies.
I never got to visit the restaurant, so I don’t know why business wasn’t good. For whatever reason, the venture never got far off the ground; it first missed a lease payment the same year it opened. In October 1996, its owners filed a Chapter 11 bankruptcy petition. In September of the next year, the bankruptcy court approved its reorganization plan.
But even that didn’t give the restaurant enough breathing room; it continued to default on its obligations. Finally, in September 2001, the leasing company filed suit against the restaurant and the guarantors. The guarantors answered that the statute of limitations had run on the claim, but the trial court rejected that defense. Its key holding for the purpose of this appeal was that the statute began to run when the reorganization plan was approved, since that contained the debtor-in-possession’s assumption of the lease agreements. The court entered judgment against the sureties for just over $100,000, including attorney’s fees.
The Supreme Court reverses, in Restaurant Company v. United Leasing Corp., focusing on the key holding described above. It finds that an assumption of an executory contract is not, as the leasing company had argued, a new obligation. More fundamentally, the sureties’ direct obligations kicked in as soon as the debtor first defaulted, way back in ’94, seven years before suit was filed. The leasing company thus waited too long to enforce the sureties’ obligations. Finally, the court reaches the conclusion (fairly evident, in my humble view) that the bankruptcy of the restaurant did not toll the running of the statute against the sureties. The automatic stay does not apply to third party obligations, such as the sureties’ undertakings here, so the clock had run.
There are a couple of issues here that will make many appellate lawyers shake their heads and sigh. For example, the court observes in a footnote that the lawyers handling the appeal kept referring to the five-year statute of limitations (which was in issue because suit was filed just under five years after the bankruptcy filing and just under four years after the confirmation of the plan). But the trial court had ruled that the UCC’s four-year statute governed here, and no one assigned error to that ruling, so four years was the law of the case. As it turns out, this difference didn’t matter, since the court finds that the statute began to run in 1994; but that could not have been comforting for the lawyers to read today.
In another footnote, the court points out that while the documents said, “GUARANTY,” the trial court had found that they were actually accommodation sureties, which are quite different animals from pure guarantors. Accommodation sureties are able to get out of an obligation if anything, anything is done to affect them, such as giving the debtor a short extension of time to perform. That technically increases the surety’s burden, however slightly, and that act can void the suretyship obligation. Again, no one assigned error to this finding, so it, too, became the law of the case.
In case you’re wondering why I point this out, it’s that the phrase, “The parties have not assigned error to this ruling,” often, though not always, translates to, “Why on earth didn’t anyone assign error to this ruling?”
The next civil procedure case arises in the context of a medical malpractice case, but the rulings are entirely procedural, and not limited to the field of medical malpractice. The decision is Thornton v. Glazer.
Thornton sued Dr. Glazer, a podiatrist who performed surgery on his left foot. He developed complications that eventually led to the amputation of one of his toes. At trial, he called his then-current physician, one Dr. Jones, in his case in chief to testify about causation. That doctor opined that Dr. Glazer had caused the complications by her prior surgery. After he testified, Dr. Jones was released from his subpoena, and left. Dr. Glazer, in her case in chief, called another physician who testified to his opinion that the subsequent problem was caused by “walking on the heel and the side of the foot.” As this testimony needed to be rebutted, Thornton moved the court for leave to read to the jury, in his rebuttal case, Dr. Jones’ deposition, where he stated that this problem could not have been self-inflicted by an unusual gait.
The defense objected, saying that Jones had already testified, and was not unavailable in the sense of Rule 4:7. The trial court agreed, and prohibited the reading of the transcript. The jury returned its verdict in favor of the doctor; Thornton appealed.
Today, that appeal bears fruit for Thornton . The court finds that a deposition of a treating physician, which Dr. Jones unquestionably was, can be used for any purpose at trial. The fact that the same witness gave live testimony does not preclude the later use of his deposition. The case is thus reversed and remanded for a new trial.
But wait; there’s more in this short but interesting and instructive opinion. The court also reverses on a novel jury instruction issue. Thornton had offered the defendant’s deposition into evidence in his case in chief. He then asked the court to give a fairly standard adverse party witness instruction (for those of you using VMJI, it’s #2.030). But the trial court refused, saying that instruction can only be given when a party calls his opponent as a live witness. This time, the defendant had “testified” to the jury only through a deposition.
The Supreme Court reverses this holding, too, noting that a deposition offered under Rule 4:7 as positive testimony is the perfect equal of in-court statements by live humans who actually sit on the witness stand. The court concludes, “a party seeking to introduce deposition testimony of an adverse party will not suffer the consequences of making the deponent his own witness.” Since that’s the holding, it was error not to give the instruction.
Land use/local governments
This category of cases includes three decisions, loosely grouped due to their local government subject matter.
Early in 2004, Cherrystone Inlet, LLC happily closed on a beautiful piece of property in Northampton County . Comprising 6 ½ waterfront acres, it offered the real estate development company a wonderful opportunity to create a limited development of great scenic beuaty for several new homes. The parcel itself was fairly narrow, running between the waters of the inlet itself and a parallel road. But the company figured it could still configure five or six developable lots out of the land, as long as it could get some anticipated variances from the County.
The variances were needed because of the land’s narrowness. County ordinances required a 60-foot setback from the road, and the Chesapeake Bay Preservation Act and other County Code provisions required an even greater setback from the shoreline, in all, 110 feet. In many places, the land was less than 160 feet in depth, so under the ordinances, it was undevelopable without one or more variances. The company recorded two subdivision plats, ultimately creating five lots, and then confidently applied for those variances, calculating that they would be granted, since otherwise the land would be of no use.
But the Zoning Administrator and the BZA had unpleasant surprises in store for the company – they denied the variance requests, leaving the developer only with the option of seeking review by certiorari in the circuit court. The court received the record before the BZA and took additional evidence, after which it found that the company had failed to rebut the presumption that the BZA’s decision was correct.
If you’ve ever traveled to Northampton County , you know that the scenery and the atmosphere there are very different from what you’ll find in Richmond . The developer counted on that change of scenery as it sought and obtained a writ to review the decisions that had all gone against it.
Today’s decision, Cherrystone Inlet, LLC v. BZA, proves no more scenic for the developer than had the previous ones; the Supreme Court affirms, finding that the trial court’s ruling was correct. The key to this finding is that the developer did not prove that the lots predated the imposition of the setback requirements. In essence, the developer is found to have created its own hardship by creating lots that could not be improved without variances. As the court notes, the company could have unified the property into a single lot and built a home on one portionof it that was wide enough to permit development without any variances. The remainder of the land could then be “a valuable waterfront amenity to that structure.”
A couple of point about this appeal deserve additional emphasis. First, the developer urged the Supreme Court to reverse the trial court based on three alternate theories, specifically, (1) because of the shallowness of the lots when the ordinance was enacted; (2) because of “other extraordinary situation or condition” of the land; and (3) to “alleviate a clearly demonstrable hardship approaching confiscation.” But as the court notes today, the company argued only the first of these in the trial court. The other two were therefore not properly preserved for appeal, and are thus not considered. In my view, the result probably would have been the same if the high court had considered these additional grounds, since the applicable restrictions long predated the company’s acquisition of the property.
Second, it is worth noting that the court refers, without any emphasis, to the fact that the circuit court took additional testiminoy in an ore tenus hearing. The trial court is permitted but not required to do that, and many BZA’s, in opposing certiorari cases, urge the circuit courts not to take additional evidence. I am not aware of any caselaw that gives the circuit courts guidance on when it is appropriate to take additional evidence instead of merely reviewing the record before the BZA. If one takes the view that the circuit court is essentially fulfilling the role of an appellate court, sitting in review of the BZA’s judgment, then additional testimony would seldom, if ever, be appropriate. The fact that the Supreme Court makes no particular mention of this practice probably indicates that the court does not view the circuit court’s role as being thus limited. In this way, today’s ruling can probably be cited as at least implicit support by “appellants” who ask a circuit court to take additional testimony.
The next case in this loose confederation is Eagle Harbor, LLC v. Isle of Wight County, a suit filed by two developers over water and sewer connection fees imposed by the county against new lots. The facts of the case are very extensive, and uless I’m willing to lose a substantial part of my audience, I’d better skip a detailed listing of those facts and get stright to the issues and the holdings.
The developers challenged the County’s imposition of the fees, in the amount of $4,000 each per lot, in 2001. They argued that they had already, in reliance upon the previous arrangement with the County, installed the water and sewer facilities on the lots and conveyed them, for no cost, to the County. Now they were being required to pay what they thoght was a confiscatory price for the privilege of bulding on each lot, for equipment they had already paid for. The County answered that it was merely recovering the overall cost of bonds for countywide water and sewer improvements, and that the fees were less than their cost per lot to repay those bonds.
The trial court sustined the County’s demurrer, and today the Supreme Court affirms that ruling. The opinion is noteworthy for an extensive discussion of one issue that appears to be unnecessary, specifically, whether the fees were in effect “an improper revenue raising device” instead of a legitimate attempt to recoup its actual costs. The court finds no support for such an assertion, but then notes that the developers did not even make such a claim in their suit. The court also finds that compliance with 1997 amendments to the state code, requiring that such fees be “fair and reasonable,” is subject only to the “fairly debatable” standard of judicial review. This is probably the most lenient standard of review applied in the courts, and predictably results in a victory for the County on this point.
This ruling deserves at least a small digression here. The reason some rulings are reviewed under the fairly-debatable standard is ultimately because of the separation of powers doctrine. As the court notes today, counties are charged to set fees, and that obligation is not delegable. As such, this is an area in which legislatures are supposed to exercise their own discretion. If the judiciary were to undertake plenary review of such decisions, it would be setting itself up as a sort of super-legislature, with oversight of purely political questions. Accordingly, where the legislature is required to exercise discretion and cannot delegate it, the courts will afford a substantial degree of deference to those decisions. The way to do that is to apply the standard that where there is conflicting evidence that could lead to opposite conclusions, the courts won’t second-guess the legislatures.
The final ruling in this case relates to an important procedural and pleading issue that has application outside the context of municipal cases. The developers assigned error to the trial court’s ruling on this case without taking any evidence. The court made a finding that the issues were fairly debatable on demurrer. They argued in the Supreme Court that their pleadings specifically assert a factual basis for the invalidity of the fees, and that those allegations must be taken as admitted for the purpose of the demurrer. The County never produced any evidence of the reasonableness, since the County never produced any evidence at all; accordingly, the case should at least have proceeded to trial.
This argument has a certain appeal (sorry), but there is a fly in this ointment. The developers attached to their pleading a copy of the County study that provided the reasons for the fee increase. Since they gave the trial court what would have been the County’s arguments, the trial court thus had enough information befor it to conclude that the issue was fairly debatable.
Oops. There are often reasons to attach exhibits to one’s pleadings, such as obtaining necesary admissions of authenticity. Strictly speaking, it is both unnecessary and inappropriate to “plead evidence” in a case; at least one treatise so notes. Costello , Virginia Remedies, §7.09. This case points out one danger of doing so. If the attachment is in some way favorable to your opponent, you have just made that a part of your pleading, to which you’re bound. The consequences of such an inclusion are seldom as harsh as they are here – that’s a product of the fairly-debatable review standard – but the lesson is worth taking to heart.
The court has one more case for us in this field, and it’s quite a story. Political scientists (and Jimmy Stewart fans) know of one solid way in which a minority member of a legislative body can stop an action that he opposes, but that enjoys the support of a majority of the body – a filibuster. One member of a town council found another creative way to stop a project that he opposed, but that everyone else wanted. The case is Jakabcin v. Town of Front Royal.
If you own a good-sized chunk of land and want to attract controversy like a lightning rod, just make a deal with Wal-Mart. Front Royal doesn’t have a Wal-Mart; the nearest one is in Winchester , some 25 miles away. Convinced that the citizens of Front Royal needed a closer dose of Wal-Mart style civilization than that, the mega-retailer contracted to purchase a 121-acre parcel in the Riverton area, just north of downtown, and applied for a rezoning and a special use permit to build the kind of store that makes mom-and-pop operations nervous.
Of course, this move did not come without opposition, even within the Town Council. The council comprised six members, and under state law, a majority, or four, is required for a quorum. Trouble started when two of the members of the council recused themselves, citing the Conflict of Interests Act (Code §2.2-3100 et seq.) That left the bare minimum available to vote on the proposals. Of those four, the likely vote would be three in favor and one opposed, so Wal-Mart appeared headed for victory.
But the retailer didn’t count on the creativity of the dissenting member. Seeing the writing on the wall, he decided that the best way for him to stop the project was to deny the council a quorum by the simple expedient of not showing up for the meeting. He wrote a letter stating that he recused himself from the vote, but did not cite COIA or any other reason. When the two COIA-recused members also did not appear, only three members remained. Those three voted aye, and the measure passed.
How can they do that, you might ask, if the quorum requirement is four? Good question. The Town Attorney opined at the meeting, in response to the suggestion of the absence of a quorum, that the COIA contains a provision that cures any quorum problems brought about by such recusals. That statute, §2.2-3112(C), says that if COIA recusals “leave less than the number required to act, the remaining members shall have the authority to act for the agency by majority vote . . ..” There were two COIA recusals, thus reducing the size of the council to four, and the three members present were a majority.
When the matter passed, affected citizens in the Riverton area filed a suit to invalidate the council’s action. The circuit court sustained the Town Council’s plea in bar, based on the reasoning urged by the Town Attorney. The Supreme Court granted the plaintiffs a writ.
The court today begins its analysis by noting that if a quorum did not exist for the vote (there were actually two votes on different days, as required by the Town’s ordinance; this was the first of those two), then the action is void. It goes on to note the importance of participation in the deliberative process by duly elected officials, observing that if any member of the Town Council voluntarily misses three straight meetings, he can lose his seat. Council members who attend the meeting are not free to just get up and leave without the consent of the presiding officer. Based on this, it’s looking good for the Town Council and for Wal-Mart.
Surprise! The court rules that the saving statute in COIA doesn’t speak to the question of “At what meetings [a] governing body may act.” That’s the title of the code section (§15.2-1415) that lists the quorum requirement. It doesn’t deal with conflicts of interests, so the COIA preemption provision (stating that COIA supersedes all other statutes dealing with the same subject matter) doesn’t apply here. That means that our nouveau-Mr. Smith succeeds in his ingenious approach to minority rights. The judgment is reversed, and there still is no Wal-Mart in Front Royal. Depending on the current makeup of the council, the measure may or may not pass in the near future, but this one is void.
Careful students of statutory construction will have noted that the court did something here that appears to conflict with a statute of another kind. Code §1-217 states: “The headlines of sections printed in black-face type are intended as mere catchwords to indicate the contents of the sections and do not constitute part of the act of the General Assembly.” This statute has been cited several times in the court’s previous opinions, and is difficult to reconcile with the court’s reference to the headline of §15.2-1415. Indeed, this opinion stands out among today’s rulings as the most troubling from an analytical standpoint. I believe it is hard to read §2.2-3112(C) as not applying to the quorum requirement, which deals with a circumstance in which a governing body “may act.” But I get a vote neither on the Town Council nor in the Supreme Court, so this is the law in Virginia .
Trusts and estates
Margaret Stewart Little, evidently a very trusting person, set up several trusts during her lifetime. One of those was intended to take care of her husband, Gordon, during his lifetime if he survived her. He did survive her, by fifteen years, so he was entitled to the benefits of the marital trust for that period.
This trust required the trustees to pay all of the income, and such parts of the principal as the trustees deemed appropriate, to Gordon on a periodic basis. In no event was he to receive less than $3,000 a month. After Gordon died, his executor suspected that Gordon hadn’t been getting everything he was entitled to over that time. He also noticed that several items of personal property had been taken from the family farm after Gordon’s death, and he believed that the trustees had removed them. He therefore filed a suit for an accounting, to determine whether Gordon had been underpaid, and to answer for the whereabouts of the allegedly purloined items.
The trustees came up with an interesting defense. They claimed that while Gordon had a right to compel an accounting during his lifetime, there was no statutory provision that gave such a right to a personal representative after Gordon’s death. The trial judge thought about that, and bit; he dismissed the case, holding that the executor had no standing to bring the suit.
In Campbell v. Harmon, the Supreme Court reverses this decision in part, finding that the survival of actions provision in Code §8.01-25 gives the executor this right. Indeed, it finds that the trial court’s ruling would amount to “a judicial repeal of Code §8.01-25.” It grants the executor the right to compel an accounting on the payment of sums due from the trust. But the trustees win one battle, however temporary that may be: The court finds today that no accounting could be compelled for the alleged removal of items of personalty, since that right did not exist as o the date of Gordon’s death. (Remember, the assertion is that the property was taken after Gordon died, so that right did not exist during his lifetime.) The court does give the executor a nice, broad hint that §64.1-145 might just do the trick, while expressing “no opinion in that regard.” (If you take a look at that statute, you’ll see that it should answer nicely.)
By the way, the corpus of Ms. Little’s marital trust devolved, upon Gordon’s death, to – you guessed it – another trust.
I’ll get the scary part out of the way first: “Domestic relations.” That’s the context of a fascinating discussion of appealability in Lewis v. Lewis. Don’t let the subject matter scare you off; this is an interesting case.
Mr. and Mrs. Lewis got married in 1976. She had obtained a divorce decree in Richmond the previous year, so being newly unhitched, she felt free to try the matrimonial route again. But after 28 years of wedded bliss, Wife filed suit for divorce in 2004 in Powhatan County , where they had lived. She also requested an equitable distribution award. Husband filed an answer in which, interestingly, he denied that the parties were married. The reason for this became clear in his companion cross-bill – he asserted that Wife hadn’t finished getting unhitched before they married, and asked the court to annul the marriage.
Oh, there was a divorce decree from 1975, all right. But Husband was only too happy to present the court with a copy of a 1979 divorce decree from a separate divorce case involving Wife and the same former husband. Even better, he had a copy of her bill of complaint from that second suit, in which Wife alleged that the 1975 divorce was “null and void for lack of jurisdiction.”
Didn’t I tell you this would be interesting? And we haven’t even reached the appellate jurisdiction issue yet. Wife responded to Husband’s cross-bill by asserting that Husband didn’t have standing to challenge the 1975 divorce decree; she moved to dismiss. She also filed a motion in limine to prevent Husband from introducing the second divorce bill, which (you must admit) would have been fairly embarrassing.
At a hearing on the motion in limine, the trial court decided not only to grant that motion, but also the motion to dismiss the cross-bill. (There is actually Supreme Court precedent for Wife’s position here, in George v. King, 208 Va. , at 138.) The court entered an order to that effect, and Husband appealed.
In the Court of Appeals, Husband alleged that the trial court had erroneously dismissed his cross-bill. That court, however, asked the parties to brief the issue of appellate jurisdiction – was the order dismissing the cross-bill a final order, subject to appellate review? A panel of the Court of Appeals eventually held that it was appealable, as it “adjudicated the principles of a cause.” The panel then proceeded to decide the appeal in an unpublished opinion, in which it affirmed the dismissal.
Normally, that would be it; rulings on annulment petitions are generally final in the Court of Appeals. But Husband decided he wasn’t finished with appealing; he sought review by the Supreme Court under Code §17.1-410(B), asserting that this case presented a question of significant precedential value. The Supreme Court thought he had a point; it granted him a writ.
In today’s ruling, the court reverses the Court of Appeals’ finding on finality, and determines that the order dismissing the cross-bill was not a final, appealable order. It does not “adjudicate the principles of a cause” because the object of the entire case was to secure a divorce and equitable distribution of the parties’ marital property; this order didn’t do that. The appeal is thus reversed and dismissed.
Appellate lawyers who occasionally have to ponder whether a given interlocutory order is appealable will want to study this case for the lessons it teaches on the court’s thinking about what constitutes a final order.
There are two interesting postscripts here, in the form of last-page footnotes. One states that the parties did not raise the question on appeal of whether the severable interests doctrine sufficed to convey appellate jurisdiction. The footnote hints that such an argument might have produced a different result, but it was not raised and therefore not considered.
The second footnote observes that the court’s resolution of the case in this way actually enabled Husband to urge a diametrically opposite argument in the Supreme Court from the one he presented to the Court of Appeals. Although the court notes that “[w]e do not condone such behavior,” Husband gets away with it anyway, for the seemingly incongruous reason that a court can always raise issues of subject matter jurisdiction, even sua sponte, at any time (including for the first time on appeal), since the parties cannot convey jurisdiction merely by agreement. Wife is no doubt asking her lawyer, “If they can do that, why didn’t they do so with the severable interests doctrine, and get this blasted appeal over with once and for all?” (Litigants are allowed this degree of frustration.) For now, the court notes that the ruling today does not prejudice Husband’s right to attack the dismissal of his cross-bill in a future appeal, once the process matures to that point. For today, Husband wins his appeal by losing it, since the court conveyed a boon (the vacation of an unfavorable Court of Appeals opinion) upon him by ruling that he didn’t have the right to appeal in the first place.
Most trial lawyers get nervous about making procedural mistakes, for fear of having to face disciplinary charges from the State Bar. In Pappas v. Virginia State Bar, one dispositive issue is a procedural mistake made by the Bar itself. Here’s what happened:
Attorney represented Client #1 for injuries sustained in an automobile collision. The next year, Client #1 was involved in another collision (the tacit implication of this is to stay well clear of her when she’s on the highway). The driver of the car in the second collision was her Boyfriend, who was charged with DUI, reckless driving, and other offenses. Client #1 suggested that Boyfriend employ Attorney to defend him in traffic court. They made that arrangement, at which point Boyfriend became Client #2. The two clients, who remained together after the collision, then moved out of the Commonwealth.
When the traffic court date arrived, Attorney appeared on behalf of Client #2 and entered a guilty plea on the DUI charge; all the remaining charges were dropped. Client #2 was still out of state, so Attorney wrote him to tell him what had happened.
The genesis of the problem is that Attorney still represented Client #1, who now had a meritorious PI claim against #2 (remember, that’s her Boyfriend; but cash is cash). Attorney was then specifically hired by Client #1 to make a bodily injury claim against #2.
Yikes! This is the same lawyer who had entered a guilty plea for an absent Client #2 in traffic court. There is roughly a 100% chance that Attorney now wishes he had never accepted this representation. But that’s hindsight; as it was, he got Client #2 to sign a waiver of the conflict, and then went ahead and filed suit. During the pendency of the tort suit, the defense lawyer move the court to disqualify Attorney from representing Client #1, which motion the trial judge granted. You’d think that would be enough, but no – the defense lawyer then filed a Bar complaint against Attorney.
At this point, you need to know something about how these complaints are handled. A district committee evaluates the charges and decides whether to certify them. That certification is analogous to an indictment. Once it’s certified, the lawyer has the choice of having the matter heard by the Bar’s disciplinary committee or by a three-judge panel. Attorney chose the committee.
The certification contained an assertion that Client #2 had moved out of state and wasn’t present for his trial, but with his consent, Attorney entered a guilty plea for him. Attorney agreed that this assertion was true. When the hearing date arrived, the Bar moved for a continuance, since it did not have a copy of Attorney’s retainer agreement with Client #1 (for her civil suit against Boyfriend). Over Attorney’s objection, that motion was granted.
Before the next hearing date, the Bar found Client #2 and deposed him; during that deposition, the client said that he never authorized Attorney to enter a guilty plea for him. Double yikes! Now Attorney has a serious problem. During the second hearing, the Bar moved the committee to amend the certification to state that Attorney had entered a guilty plea allegedly with Client #2’s consent. It also sought to introduce the deposition. Both motions were granted over Attorney’s objection. At the conclusion of the proceedings, the committee recommended a six month suspension. Attorney appealed to the Supreme Court.
The high court turns out to be a much better forum for Attorney. First, it finds that it was error to amend the certification. The district committee certifies the charges, after which the committee is not at liberty to mark it up with a lot of changes. The court finds that it was error to permit the amendment and to admit the deposition. The suspension is thus reversed. But the court doesn’t stop there; it goes on to rule that, as a matter of law, Attorney’s actions did not rise to the level of misconduct required to find him in violation of Rule of Professional Conduct 8.4(c). The charges are thus dismissed in their entirety, and Attorney walks away with a clean record.
Needless to say, both sides could have benefited from a little hindsight here. But as no one has yet figured out a way to manipulate time, both will have to live with the lessons they learned here.