ANALYSIS OF APRIL 21, 2011 SUPREME COURT OPINIONS[Posted April 21, 2011] For fans of classical-Roman history like me, today is a high holy day, the anniversary of the legendary founding of Rome. It’s also opinion day in the Supreme Court. We get 20 published opinions, plus two cases decided by order. Let’s dig in.
Normally in valuation disputes, evidence of comparable sales can be excluded if they are themselves the product of condemnation, or the threat of condemnation. That’s because condemnation, with its threat of involuntary conveyance, can leave a landowner more likely to accept an offer he wouldn’t take in a straight sale. In the usual case, a landowner will object to a condemnation-induced comparable sale because the sale price is likely to be depressed by that factor.
But what about the condemnor? Can it ever complain that it paid too much in an earlier sale, and thus keep that comparable sale out of evidence? That’s the issue in Dean v. Prince William County. The county condemned Dean’s land to expand a bus maintenance facility and to build a parking facility for commuters. When Dean came up with a comparable sale it liked, the county moved in limine to exclude it, since it was consummated pursuant to a road-improvement project, and that property had been directly in the path of the expansion. The county claimed that the purchase price in that earlier sale had been skewed by the fact that it was “influenced by a degree of compulsion or compromise,” since the county “lacked flexibility” in purchasing it because of its location.
The trial court agreed and excluded the sale from evidence. On appeal, the Supreme Court rules that this decision was within the trial court’s discretion. It sees nothing wrong with applying this rule to the “other” side of the aisle. In doing so, it accepts the county’s word that in the earlier sale, it would have filed a certificate for significantly less money, but it wanted “to avoid any risk of time and expense of going to court.”
The county does enough to win here, but not enough to convince everyone. Justice Mims dissents, finding the county’s claimed “compulsion” to be an illusion. Noting that it’s possible to show that a condemnation-influenced sale was still acceptable as a comparable sale, he indicates that the landowner, Dean, did that in this case by calling the owner of the other parcel, who stated that he felt no compulsion to sell. The dissent rejects the county’s claim that it was compelled to buy; it possessed the power to condemn the property outright, and since this was for a road project, the time component was immaterial (condemnors can use quick-take procedures for road projects, in which case they take title immediately). All this represented was a desire to avoid the risk of an unfavorable condemnation award, and that’s a business decision; not compulsion. Finally, because I’m always a sucker for a nice turn of phrase, I’ll quote the conclusion of the dissent here: “Perhaps compulsion, like beauty, is in the eye of the beholder. I shed no tears for any government that complains of compulsion while simultaneously wielding the big stick of condemnation.”
On the merits, I think Justice Mims is right here. The only “compulsion” on the county is what it imposed upon itself. If the property really was in the immediate path of the road project, who put it there? Based on what I can see here, it looks like the county did. Self-imposed “pressure” shouldn’t be used as leverage in litigation.
The closing chapter of the 61st Street Pipeline project in Virginia Beach comes today in VMRC v. Clark. The court today reverses the Court of Appeals and rules in favor of VMRC. The primary ruling today is that the CAV erroneously relieved the petitioners (homeowners near the location of the proposed pipeline) of the obligation to allege facts sufficient to give them standing. The admin-law rule governing these cases sets forth a number of specific requirements for appeals to circuit courts, and the obligation to prove standing isn’t one of those listed. The CAV accordingly reversed a trial-court finding that the petitioners didn’t have standing.
This ruling is reversed because the justices find that establishing standing is a fundamental requirement for any litigation, and the promulgation of a rule of court can’t relieve a plaintiff of the obligation to show that he belongs in court. Here, the court finds that the allegations in the complaint merely showed that the petitioners lived nearby and disagreed with VMRC’s decision to approve the pipeline. This implicates the separation-of-powers doctrine; whether to build is a purely political question, unless the petitioners can show that they are specifically harmed.
There’s an interesting appellate-law angle to one other ruling today. In dismissing the administrative appeal for lack of standing, the trial court refused the petitioners’ request for leave to amend their pleadings to beef up their standing allegations. The petitioners assigned error to this ruling when they went to the CAV, but that court didn’t have to reach that issue, because it ruled (incorrectly, it turns out) that standing wasn’t a necessary element of this kind of appeal. The Supreme Court finds that this issue is waived today, because the petitioners didn’t assign error to it.
Did you catch that? The petitioners won in the CAV, and the Supreme Court rules that they’re out of court because they didn’t assign error to the CAV’s decision not to reach the second issue. This is another of the many appellate traps for the unwary – or even the wary, as it turns out here. In order to preserve this issue for review in the SCV, the appellee was required to assign cross-error to the CAV’s failure to rule on the issue.
Today’s short opinion in Virginia Department of Corrections v. Estep deals with an involuntary demotion of a former prison superintendent. She filed a grievance of that demotion, and the hearing officer ruled in her favor, ordering the department to reinstate her to a comparable position. If the department could not do that, it was ordered to restore her to the exact job she had before the demotion. No one appealed that order, and it became final.
The department moved Estep to a new position in a nearby facility, though with a different title and different job responsibilities. Perhaps most important for this case, it classified her new position as “Security Manager II” and had her reporting to a Security Manager III. Her previous position had been a Security Manager III, reporting to a Security Manager IV. There were other key differences between the new position and the old one.
Estep filed a suit to implement the now-final decision issued by the hearing officer. The trial court ruled in her favor, and the department appealed to the Court of Appeals. In a decision that will be of significant interest to appellate jocks, the CAV transferred the appeal to the Supreme Court, since this was not an appeal of an admin-law ruling. Remember, the original admin-law ruling was never appealed. This was a new suit, asking for the functional equivalent of specific performance. The justices today agree that the appeal belonged on Ninth Street, not Eighth. They also agree with the trial court that the two positions are not equivalent, so they affirm the trial court’s order compelling the department to replace her to her original position in the first prison.
The practical problem here is that that original position had previously been filled. Now that we have this opinion, that corrections officer is going to have to move.
Banking and usury
If you’ve been following the debate over payday lenders, you’ll want to take a look at today’s opinion in Ruby v. Cashnet, Inc. The story will be familiar to customers of these establishments: Every month for nearly three years, Ruby showed up at her lender’s office, paid a $500 loan (plus a $75 finance charge), and got a new loan for $500. In this way, she was bleeding $75 a month, purely for the right to get another loan at an effective annual rate of 180%.
The question in this appeal is whether this practice is actually a refinance or a renewal of the previous loan; if it is, then it runs afoul of the statutes prohibiting such practices. The lender argued that it was making new loans each time, and the trial court agreed; but today, the Supreme Court reverses and remands. The court turns aside a contention that this interpretation makes a 2008 statutory amendment redundant, finding that the amendment can be read to “go beyond the circumstances of this case.”
There are lots of goodies for insurance geeks in Farmers Insurance Exchange v. Enterprise Leasing. The appeal addresses the interplay of a rental car and its renter, when the company is self-insured.
Enterprise, as you may have noticed, rents cars. Virginia law requires that a renter must provide the statutory-minimum insurance coverage for its fleet of cars, regardless of whether its renter is insured or not. Enterprise elected to self-insure, rather than pay a company a fat premium every six months like you and I do.
Perhaps the first bad sign was when a renter appeared at an Enterprise counter and asked to rent a car while his vehicle was being repaired from a previous accident. As it normally does, the company offered the renter the opportunity to purchase something called “supplemental liability protection,” which is itself a form of insurance. Perhaps reasoning that his regular insurer would cover him while he drove a rental car, the driver declined the extra coverage. He then thanked the rental agent, took the keys, and went out and hit somebody else.
Happily, it was a property-damage-only claim, amounting to $5,000. (Lesson #1: If you think the Supreme Court only grants writs in big-dollar cases, think again.) Enterprise paid the claim and then turned to the renter, citing the indemnification clause in the rental agreement. That clause obligated the renter to make good on all claims arising out of his operating the car, should the company be obligated to pay anything. It helpfully provides that the renter can look to his own policy for coverage, but ultimately he’s liable.
This driver was primarily covered by Farmers, which after two consecutive accidents may be rethinking its underwriting decision with this guy. Farmers filed a DJ action, seeking resolution of the question of who, if anyone, has to repay Enterprise what it laid out.
As promised, this case is simply pregnant with juicy issues. Here’s how the Supreme Court evaluates things:
1. The primary purpose of the requirement that the rental company provide insurance is to protect the innocent public, not the renting driver.
2. This obligation can’t be passed off from the rental company’s insurer to the driver’s primary insurer.
3. But self-insurance is different from insurance. In fact, it’s dispositively different.
4. The anti-subrogation rule, which prevents an insurer from suing its own insured to recover what it has to pay out to the victim, doesn’t apply to self-insurers. Accordingly, the indemnification clause can be enforced against the driver, since he declined to buy the supplemental protection.
5. Since the driver is obligated by the indemnity clause, his insurance company (that would be Farmers) has to pay.
6. The foregoing conclusion is not altered by Farmers’ “other insurance” clause (making its coverage secondary to any other available collectible insurance), because, as noted above, self-insurance isn’t really insurance. It is, as today’s opinion points out, “the antithesis of insurance,” a decision to retain risk instead of transfer it.
As I wrote above, this case is loaded with valuable rulings in the insurance-law context, and looks to me to be destined to be cited quite often in the near future. It might also inspire other rental-car companies who aren’t self-insured to consider that option, since the effect of this decision is to exonerate the rental company from liability, since the driver had other insurance.
One other published opinion released today turns on insurance law – GEICO v. USAA addresses questions of permitted use of a vehicle. In this case, Mom owned a car and dedicated it to Daughter’s use. Mom says that she gave Daughter strict instructions not to allow anyone else to use it. Daughter’s level of compliance with that directive was, the trial court found, less than faithful; the court found that Daughter let pretty much anyone with whom she was on a first-name basis borrow it, at least for limited stretches.
Trouble arose one night when a dispute arose between Daughter and an acquaintance named Steven (I hasten to add, no relation to your scribe, although he does spell the name correctly). Steven, who had driven the car previously that night with Daughter’s consent, took the keys and drove away without notifying her in order to blow off steam from his anger. Predictably, he had an eventful evening, as he was involved in a collision.
The dispositive question here is whether Steven had Mom’s imputed consent to drive the car. Mom’s insurance covers the owner and any permitted user. Mom gave Daughter permission, but Mom apparently had never met Steven, so she didn’t give direct consent. Still, Virginia law gives Daughter the right to give permission, too, in which case her consent is enough to trigger coverage where the secondary-permitted use is within the scope of the Daughter’s consent.
Except that in this case, the court finds that Steven’s use wasn’t within the scope of Daughter’s permission. She had no idea he would take off, and 30-40 minutes after she discovered the car missing, she called the police to report it as stolen. That, the Supreme Court finds, means that he didn’t have permission to go joy-riding – anger-riding? – so Mom’s insurance doesn’t apply.
This case is remarkable for one appellate angle: the court reverses the trial court’s finding on the basis that no credible evidence supported the conclusion that Steven had Daughter’s permission. That may sound ordinary to you, but it’s not; very few appellate decisions, in my opinion, feature a reversal like this. Most appeals that challenge trial courts’ factual determinations are headed for a speedy exit, but here’s one that succeeds.
In a published order, the court modifies its September 2010 decision in Uniwest Construction v. Amtech Elevator Services, an indemnification dispute involving the collapse of scaffolding at a construction site. On rehearing, the court vacates its earlier finding regarding damages and remands the case for reconsideration. The fundamental question here is whether the indemnity provision is one that would exonerate a party from its own negligence.
Beginning in 2006, Virginia’s rules of court specify how the doctrine of res judicata will be applied. In Gunter v. Martin, the court decides a hold-over case, one based on a judgment entered before 2006. Martin is a widow who qualified as administratrix of her late husband’s estate. She filed a list of heirs, naming only herself. That generated some resentment from Gunter, who claimed to be her stepson and the decedent’s natural son. He filed suit seeking to be listed as an heir, but that was dismissed in 2005 because he had not filed an affidavit of parenthood within a year.
In 2009, the stepson, undeterred, filed another suit seeking different relief. He asked the court to declare him to be a part owner of certain land owned by his putative father, and he urged partition of that property. The trial court in this action sustained a plea of res judicata, since the requests for relief here were base on the issue that had already been adjudicated in the first suit. That is, his right to relief in the second action depended upon his being found by a court to be the decedent’s son.
Today, the Supreme Court reverses after examining the pre-2005 requirements for the application of this common-law doctrine. It requires four elements, and the court stops at the first one, because it determines that the remedies sought were not identical. The first suit asked the court to declare the son an heir to the decedent’s estate. The second one asked the court to declare that he was entitled to property that passed outside the estate. Since those are different, the four-part test won’t bar this action.
If you think this is one of those decisions that will be obsolete upon arrival, keep in mind that this situation is likely to recur. The new rule applies to all judgments in suits filed on or after July 1, 2006. For a number of years going forward, older judgments may form the basis of claims of res judicata, so this one is required reading whenever you think this doctrine might apply based on a judgment that’s more than a few years old.
In previewing the opinions that were likely to come down today, my eye caught on the first assignment of error in Dunn, McCormack & MacPherson v. Connolly, a tortious-interference suit involving (of all sacred things) legal services. The appellant is a law firm that had a long-term (though at-will) gig as counsel for the Fairfax Redevelopment and Housing Authority. But Connolly, the chairman of the county’s board of supervisors, allegedly didn’t like the firm, so according to the complaint, he induced the authority to fire the firm and hire someone else. The firm filed a tortious-interference suit against the chairman, presumably in his individual capacity.
The trial court sustained a demurrer after engaging in a colloquy with counsel on the question of what the chairman had done that was improper. (Since the contract was terminable at will, the plaintiff had to establish that the defendant used improper means to achieve the termination.) Reasoning that the chairman didn’t check his First Amendment rights at the door, the court found that the chairman had the right as a citizen to urge the authority to find other counsel.
Back to that first assignment of error, which I had found so intriguing:
“The circuit court erred by invoking an affirmative defense, privilege – a defense never claimed by Connolly – to sustain the demurrer to the amended complaint. The only issue before the circuit court in considering the demurrer was whether the amended complaint stated a prima facie cause of action, not whether some defense might be available to defeat the cause of action.”
This becomes a complicated pleading issue: Can a trial court sustain a demurrer based on an affirmative defense? My gut told me that the answer to this should be no, because demurrers only look at the face of the complaint, and turn on whether the plaintiff states a claim for which relief can be granted. But the Supreme Court doesn’t address this issue squarely; it affirms based on the premise that the complaint doesn’t describe any conduct by the supervisor that was legally improper. The law firm contends that the supervisor was “motivated by personal spite, ill will and malice,” but the court refuses to “extend the scope of the tort” to include actions that are merely based on such motives. There has to be something improper about the means, not the motive, for this tort to get to a jury.
Medical-malpractice plaintiffs have often resorted to the continuing-treatment doctrine to ward off statute-of-limitations goblins, and we get a refinement of that doctrine today in Chalifoux v. Radiology Associates of Richmond. The patient was examined no fewer than five times for pain and related conditions on the right side of her head over the course of three years, all by the same radiology group. The group performed separate MRIs on her over that span, and all of them came up normal. A subsequent, sixth MRI revealed an abnormality that the radiologist conceded should have been detected from the outset.
The patient filed suit within two years of the last report, so you’d think that she slipped in under the wire. But the radiology group persuaded the trial court that radiology isn’t like, say, dentistry, in that radiologists don’t have an ongoing relationship with the patient. The doctors also pursued one other issue that the trial court apparently did not rule upon, specifically that radiologists don’t treat anyone. Their roles are episodic and diagnostic. In that sense, the doctors urged, you can’t have a continuing-treatment doctrine where the doctor isn’t treating the patient.
Today, a divided Supreme Court reverses and sends the case back. It rules that this line of continued imaging for the same problem did indeed create a continuing relationship with the patient. The court notes that all of the patient’s past records are kept together, and are consulted by the radiologist every time a new image is taken and interpreted.
Senior Justice Russell dissents, and is joined by Justice Goodwyn. The dissent emphasizes the absence of treatment by professionals who serve only as diagnosticians. The traditional rule permitting a delayed filing of suit is to permit the doctor-patient relationship to continue while the doctor is trying to effect a cure, but that isn’t the case with radiologists, who don’t cure anything.
This appeal is the first case in which the Supreme Court has considered whether the continuing-treatment rule applies to radiologists.
If you’d like a good illustration of what a nightmare is, I recommend that you read the first 3½ pages of Lewis v. Kei. Here’s a guy, sitting in his parked pickup one hot afternoon, minding is own business (well, actually he was talking on a cell phone), and a 10-year-old kid walks up to him and asks him for a ride home because it’s a long ways off. The guy doesn’t know the kid, but feels sorry for him, so he agrees to give him a ride. The kid gets in the cab and waits for the driver to finish his call.
That’s when things plunge off a cliff for our protagonist. A nearby homeowner, who knows neither the driver nor the kid, sees what’s going on and draws entirely the wrong conclusion. He walked up, told the kid to get out, and told the driver that he was calling the police, suspecting an attempted abduction. The driver explained what had happened, and then drove away, leaving the kid standing there, still miles from home. Inexplicably, the homeowner doesn’t ask the kid to confirm the driver’s story; he just calls the police and reports the “crime.”
It gets worse; a local TV station picked up the story and reported that police are on the lookout for a suspected kidnapper. The story portrays the homeowner as a hero who thwarted the attempted crime. Six days later, without ever interviewing the kid to confirm the homeowner’s accusation, a police lieutenant got an arrest warrant, and the poor driver was subsequently arrested. The lieutenant gloated (so the complaint asserts; this case was decided on demurrer) publicly about the arrest, saying that everyone could rest easy now that the Bad Guy was in custody.
The driver spent 41 days in jail, having bail denied twice, before someone finally got around to asking the kid, “What happened?” The kid was fortunately honest; the charges were dropped shortly afterward, and the arrest records were expunged.
This appeal is about the ensuing lawsuit, filed against the homeowner and the lieutenant, for malicious prosecution, false imprisonment, and defamation. The lieutenant’s lawyer filed a demurrer, and the homeowner, acting pro se (this is what you call a bad sign for the potential collectability of any judgment against him), simply adopted whatever that lawyer wrote and said. The trial court sustained the demurrer on all counts as to the lieutenant; the homeowner was nonsuited, and this appeal proceeded only as to the officer.
The court today affirms the dismissal of the prosecution and imprisonment charges. Even though the homeowner’s report turned out to be false, the police didn’t know that at the time of these events, so they were justified in acting upon them. True, a quick phone call to the kid’s house would have avoided all this mess, but the lieutenant didn’t do anything knowingly wrong.
Defamation, however, is another matter. The complaint asserts that the lieutenant made numerous factual statements that cold be proven true, or not. That means that they’re proper subjects for a jury to consider, so the court reinstates that claim and remands the case for trial by jury.
The final tort case of the day is Volpe v. City of Lexington, a tragic story of a drowning death at a city park. The park includes a stretch of the Maury River, across which a dam had been built long ago. In most instances, flow across the top of the dam is very modest, to the point that swimmers swim over to the dam, climb up onto it, and then dive into the waters downstream.
That’s fine at normal water levels, but when the river is up, enough water runs over the dam to create a hydraulic, a very dangerous situation that’s well-known to people who know something about white-water. But there are two rubs here, both based on the construction of this dam. The first is that it can be very difficult for swimmers to tell when the water level is sufficient to create the hydraulic. The second is that unlike most naturally occurring hydraulics (such as those created by boulders in Class-V rapids), this one stretched the entire width of the river. You can sometimes swim out of a hydraulic created by a boulder, but this one can trap a swimmer.
It trapped one young man on an April day in 2006 and didn’t let him go for 22 hours. His parents sued the city, asserting various theories of recovery, including gross negligence, willful and wanton negligence, and nuisance. At trial, the court struck the willful and wanton negligence claim, refused to instruct the jury on the nuisance claim, and allowed the gross-negligence claim to go to the jury. Unfortunately, the jury couldn’t agree, at which point the court went ahead and struck that claim, too.
The Supreme Court today first addresses whether the city had a duty to warn swimmers against the risk. It finds that the decedent was an invitee, and that the risk was hidden from normal observation, so it rules that a duty to warn did exist. It then affirms the dismissal of the willful and wanton claim, but reverses and directs a new trial on the gross-negligence claim and the nuisance claim. Gross negligence is a matter for the jury to decide, and under these facts, a jury might conclude from the evidence that the city displayed a “want of even scant care” (that’s the customary language from gross-negligence cases), since it took no steps at all to warn swimmers of the danger.
A prosecution for abduction requires proof of three things. The defendant must seize, take, transport, or hide the victim (either by force, intimidation, or deception); he must do so with the intent to deprive the victim of her personal liberty; and he mush act without legal justification or excuse. The second of these elements is the key aspect of Burton v. Commonwealth, involving a sort of peeping tom with a novel angle.
Burton approached the victim in her car and explained, pleasantly enough, that she had brake fluid leaking. Coincidentally she had just had some work done, so this sounded plausible; he offered to help. After she opened the hood, he directed her to lie across the two front seats and apply equal pressure to both sides.
Those among you who are savvy about the inner workings of motor vehicles have just said, “Hey, wait a minute here . . . .” Brake fluid isn’t going to have anything to do with the pressure applied to the front seats. After she stayed in this position for a few minutes, she became concerned and got out of the car; she then saw her would-be good Samaritan watching her carefully while engaging in a time-tested form of sexual self-gratification.
The ostensible mechanic found himself indicted for abduction; the prosecution reasoned that by directing the victim to lie across the seats, he had, by deception, seized her by depriving her of her personal liberty. A jury agreed with this accusation, and the Court of Appeals decided not to intervene. The justices, however, reverse, holding that the plain intent of the defendant was his own sexual gratification, not to deprive the victim of her personal liberty.
This ruling prompts a dissent by Justice Mims, joined by Senior Justice Carrico. The dissent argues that the jury rejected, as a matter of fact, the very defense that the majority uses to reverse. It also reveals an unstated premise of the majority’s reasoning: the fear that this conviction might be used to justify a felony prosecution based purely on a prank. On this basis, the dissent argues, the majority holds that acts of deception should be treated differently than those involving force or intimidation. The dissent concludes that such a distinction isn’t found in the statute, and this isn’t a case of a prank.
Let’s turn to expungement orders, and Necaise v. Commonwealth. Necaise was charged with two felonies, but at the preliminary hearing, both of them were reduced to misdemeanors, to which Necaise entered guilty pleas. The next year, he filed petitions seeking expungement of his felony-arrest records; the trial court refused.
Today, the Supreme Court agrees and affirms. It notes that the expungement statute was enacted for the protection of innocent persons, not those who are guilty. Necaise was technically innocent of the felony charges, but was convicted of less-included misdemeanors, so he doesn’t get an expungement.
The longest criminal-law decision released today, Commonwealth v. Smith, produces the sharpest split in the court. You’ll note from the fact that Smith’s name appears after the v that this is an appeal by the Commonwealth from a case it lost in the Court of Appeals. I covered this appeal when a panel of the CAV reversed the conviction in October 2009; that analysis, and a description of the fact, can be found here.
Today, a 4-3 bare majority in the Supreme Court reverses and reinstates the conviction, holding that the police database did provide sufficient articulable suspicion to justify a pat-down for weapons. The fact of a criminal history alone, the majority assures us, still isn’t sufficient to justify a pat-down absent Terry-stop suspicion. But this database revealed that in the previous 11 months, Smith had been arrested twice, once for possession of a firearm (he was already a convicted felon) and once for possession of narcotics. The majority holds that this particular information was enough to trigger the officer’s reasonable desire to ensure his own safety by patting Smith down for weapons, a precaution that proved fruitful when Smith had a gun on him after all.
A vigorous dissent insists that there is nothing here more than the prior arrest record (and not even a conviction record, at that; just two arrests) behind this frisk. It points out that a frisk is more intrusive than an order to get out of a car after a normal traffic stop (this was a stop for nothing more than a burned-out tail light), and something more is required to justify a pat-down. In this case, the dissent notes, there was nothing furtive about Smith’s actions before the pat-down, and he gave his ID willingly on request. Here, according to the dissent, there was nothing beyond Smith’s criminal record – and the specific entries in it – to give any police officer pause.
This decision is going to hit a lot of nerves, although admittedly it will calm a lot of other ones on the prosecutorial side of the aisle. Ensuring the safety of police officers is important business, but so are Fourth Amendment rights. Today’s slim majority indicates just how close this call is, and the strength of the dissent may inspire Smith to see if he can find succor in Washington. The case also has a sort of man-bites-dog feel to it – we frequently see the Supreme Court reverse a pro-prosecution ruling from the CAV, but I can’t recall the last time we saw the Court of Appeals reverse a conviction and the justices reinstate it.
One last point: This case was argued last year and held over for decision until today. Justice Goodwyn writes the dissent on behalf of the late Justice Hassell (who was chief justice when the case was argued) and now-Senior Justice Koontz. This, then, is the final decision to be reported from Justice Hassell’s distinguished juridical career; the last appellate decision on which he cast a vote.
The court decides an ineffective-assistance petition today in Byrd v. Johnson. As my readers are well aware, the court evaluates these petitions under Strickland v. Washington by reference to two factors: whether the lawyer’s actions fell below the standard of care, and whether the defendant was prejudiced as a result. In Byrd’s petition, he asserted that his trial lawyer blew it by not renewing a motion to strike at the close of all the evidence. The appellate effect of this failure is that the question of sufficiency of the evidence is foreclosed on appeal. The trial court found that the first prong was met, but not the second, because the evidence was clearly sufficient to establish guilt.
There’s one particularly interesting angle here for appellate practitioners. The court recently reaffirmed in the Wintergreen Partners case that the standard for proving the case within the case in legal malpractice suits involving appellate errors is particularly difficult: the plaintiff must show that but for the error, the judgment would have been reversed as a matter of law. That, in my mind, calls for inherent speculation on the part of trial judges, who must decide on their own – no expert testimony on matters of law, now – what the justices would have done with the merits of the case.
In Byrd, the court today phrases the issue thusly (note the similarity to Wintergreen): “The question whether, within a reasonable degree of probability, the outcome of the case would have been different in the absence of counsels’ defective performance can only be answered, in the procedural posture of this case, by determining whether the petitioner would have had a reasonable prospect of success on appeal if the appellate courts had been able to reach and consider his contention that the evidence was insufficient to support the verdict, that being the sole question presented on direct appeal.” (Emphasis added)
You can see that it’s easier for a habeas petitioner (who must only show a reasonable prospect of success) than it is for a legal-malpractice plaintiff (who must show reversal as a matter of law). But both cases require some degree of what I will unhesitatingly call speculation on the part of the trial judge as to what the appellate court would do with the case. I don’t know of any trial-court judges who profess to be good at figuring out in advance what the appellate courts will do with a given appeal; but that’s what the courts are required to do in these two contexts.
When you think of waterways and tacking, your mind will naturally turn to sailboats. But that’s not the kind of tacking that’s in issue in the second visit to the Supreme Court by the parties in Scott v. Burwell’s Bay Improvement Ass’n. In their first sail up the James to Richmond (see my analysis, and more detail as to the facts, here; you’ll need to scroll down a ways), the association won by persuading the justices that Scott didn’t have a dedicated riparian right after all. On remand, the remaining questions were whether Scott had obtained such a right by adverse possession or by prescription.
The trial court, without taking any evidence, ruled that Scott’s evidence failed to measure up to the demanding standard (clear and convincing evidence of possession for 15 years). The justices affirm that ruling today, holding that at most, Scott proved the requisite elements of adverse possession for 14 years, from 1989 until the unwelcome arrival of Hurricane Isabel in 2003. But what about Scott’s predecessors in title? They unquestionably used the property, and Virginia law allows an adverse-possession claimant to tack his predecessor’s period of possession.
Well, not in this case, it doesn’t. Today’s opinion is a good exposition of the law relating to the tacking doctrine. The court rules that a claimant has to establish the period at which his predecessor began his occupation, and has to show all the usual components of an adverse-possession claim – open, hostile, exclusive, continuous, etc. – for that time. Scott’s evidence didn’t establish those factors by clear and convincing evidence, so the judgment is affirmed.
One point of particular interest to appellate practitioners: In what may be a first-impression ruling, the court decides that it will evaluate adverse-possession rulings in this posture as mixed questions of law and fact. That means that the appellate court will afford deference to the trial courts findings of fact, assuming there is some credible evidence to back them up; and will review legal rulings de novo.
In the Burwell’s Bay case discussed above, one of the legal principles underlying the court’s ruling is the Commonwealth’s authority over tidal waters below the mean-low-water mark. That issue is front and center in Jennings v. Northumberland County, which answers the specific question of whether local land-use laws apply to piers that jut out into waters controlled by VMRC.
By law, the Commonwealth holds all waters below mean low water for the benefit of the citizens of Virginia. VMRC is given the authority to regulate the use of those waters and the bottom-lands underlying them. Northumberland County’s zoning ordinance regulates piers, even those that extend below the MLW line, and the owner of a boatyard sought a judgment that the county didn’t have the authority to require a special exception for the construction of those piers.
The Supreme Court today agrees with the trial court that the county can indeed regulate the use of those waters, particularly where it implicates the use of the adjacent land. Here’s the seminal holding of this case that spells doom for the boatyard owner’s cause: ”The regulatory authority granted the VMRC by the General Assembly does not preclude, but rather contemplates, that VMRC and a locality will have concurrent authority to regulate the construction of piers upon state-owned bottomlands where the pier is also ‘erected along the waterfront of such locality.’” The court also rejects an argument that the county’s ordinance lacked detail as to the standards to be applied to the granting or withholding of such special exceptions.
Many great novels begin with long stretches of dry text before the real action of the story begins. Oh, sometimes the opening line is particularly memorable, such as that in A Tale of Two Cities, where we sort-of learn what time Dickens thinks it is; an elegantly short gem like, “Call me Ishmael”; a brilliant portent of a character we have yet to meet, with the best example being, “’Tom!’ No answer. ‘Tom!’ No answer”; or my personal favorite, from Pride and Prejudice. But more often, you have to put some work into a book, particularly in the opening chapters, in order to get anything out of it. You can’t judge a book by its cover, but most of the time, you can’t judge it by its opening paragraph, either.
In that vein, I invite my loyal readers not to overlook today’s opinion in Condominium Services, Inc. v. First Owners’ Association. The opening paragraph tells the casual reader that this case is about a dispute between a condo association and a company hired to manage it. That sounds dreadfully dull, particularly if your practice doesn’t include condo law. But in my opinion, this is The Case of the Day. It contains a wealth of helpful rulings on a variety of legal issues, including contract interpretation; the sometimes-fuzzy boundary between contract and tort; the contours of permissible expert testimony; punitive damages; and remittitur. The pièce de résistance is a badly-needed clarifying ruling that made me stand up and cheer – well, metaphorically, anyway – about the real limits imposed by the John Crane discovery doctrine.
An Alexandria condo association hired a company in 2005 to manage its affairs. The term was for two years, with either side having the right to terminate the deal on 90 days notice. The association also had the right to fire the company for cause on 30 days notice. The management contract stated that the “documents governing this relationship consist of” several document, including the association’s bylaws. Thos bylaws contain this requirement: “The Owners’ Association shall not change Management Agents or undertake self-management, without the prior affirmative vote of members representing three-fourths (3/4ths) of the votes of the Residential and Commercial Unit owners present at any meeting of the members duly called for such purpose . . . .”
A few months into the two-year term, the association sent the company a 30-day notice, terminating the contract for cause. It asserted that the company had failed to properly handle the financial records of the association, including tax records. The company’s response was astounding to me: A month after this notice, it wrote to all the unit owners and instructed them to continue sending their condo dues to the company. Its principals then went into a bank, masquerading as association officers, and opened a bank account in the association’s name. (This fraudulent act should cause you to suck wind, as it did to me.) The company then continued to pay itself from this account its normal monthly management fees of roughly $6K, for about 15 months; although it faithfully forwarded all amounts above that to the association.
The threshold question here is whether the association properly terminated the contract. You see, no one convened a meeting of the owners, and no ¾ vote was ever taken. The company contended that in the absence of that vote, which is specifically required in the bylaws, the agreement was still in place, and the association just had to live with the company’s handling of its affairs.
No dice, the Supreme Court rules today. The management contract may refer to the bylaws, but that’s not enough to incorporate them by that reference. The purpose for the contract’s mention of the bylaws, the court finds, is to outline the documents with which the company was obligated to familiarize itself; the court cites the very next contract section in support of that conclusion. That means that the association had indeed terminated the contract by its 30-day letter.
The court next takes up the association’s claim that the company converted the $90K in management fees. The trial court had granted summary judgment on that issue, because the company’s only response to it was that the contract was still in force. We all know that summary judgment is a disfavored remedy in Virginia courts (in contrast to federal courts, where it’s favored), but given the ruling that the association properly terminated the contract, there was simply no arguable basis upon which the fees could be taken by the company.
But how is this a conversion, you ask? Isn’t conversion a tort, and wasn’t this relationship based in contract? You ask good questions. The answer here is that once the association terminated the deal, the relationship of the parties changed. This is the bookend to the recent Abi-Najm case, which held that a fraud committed before the contract was agreed to could be addressed by tort law; contract law only took over once the parties had a contract in place. Today, the court rules that once a contract has ended, tort law can be back in play.
Let’s keep going, and head for the stand-and-cheer ruling. The association hired an accounting expert to state how much the association had been damaged by the company’s mis- or malfeasance. In answers to interrogatories, it disclosed his opinions that such damage had occurred, but listed no specific amounts. This produced a John Crane motion by the company, since the disclosure wasn’t specific enough.
Please permit me to digress a moment, to rail at some lawyers. We’re a hyper-vigilant bunch in certain regards, and when the justices make a particular pronouncement, many of us pounce on it in the belief that its reach is broader than what it really is. That was emphatically the case with John Crane, Inc. v. Jones, in which the court affirmed a trial court’s exclusion of two experts’ testimony because it had not properly been disclosed; one had been disclosed too late, and the other disclosure omitted one area of testimony entirely. Many lawyers took that as a signal that the justices expect each and every syllable of the expert’s proposed testimony to be disclosed, upon pain of exclusion.
That isn’t what John Crane says, and that isn’t how it should be interpreted. Today, we have a ruling that might finally turn the heat down on this kind of discovery dispute, which has plagued the courts of the commonwealth for four years now. The trial court ruled that the disclosure of the accountant’s anticipated testimony, while not in intimate detail, was enough to apprise the company of its scope and to allow the company to prepare for trial. The Supreme Court holds that that ruling was within the trial court’s discretion. Lawyers filing John Crane motions henceforth should know that the doctrine isn’t as broad as they once thought it was.
The court also affirms trial-court decision on the specificity of the expert’s damage-calculation testimony, noting that he need not offer it with precision, as long as the jury can make a reasonable estimate of the damages. It predictably affirms the submission of the association’s punitive-damage claim to the jury, since the company’s actions in fraudulently opening the bank account and then diverting money to itself could amply support the jury’s verdict. Finally, the court affirms the trial court’s decision not to order remittitur of the $275K punitives award, particularly since that was a mere 2.5 times the amount of compensatory damages.
There’s a key ruling in this last component that warrants a short separate discussion. The company objected that there was no evidence that the punitives were proportionate to its net worth. There was testimony that the company was having financial problems, raising the specter of an award of a destructive level of such damages. But the company never got into specifics about its own finances; on appeal, it asserts that the association had the burden to adduce such evidence to ensure that any punitive-damage award wasn’t oppressive, given the company’s financial health. The Supreme Court rules that the company – the defendant – has the obligation to adduce such testimony if it wants to rely on this issue.
It’s as simple as this: If you try cases, you’ve got to read this decision.
I’ve previously written about Ford Motor Company v. Gordon, back when it was decided by the en banc Court of Appeals at the end of 2009. Today the justices affirm that ruling, essentially on the same rationale as the CAV had ruled, so I won’t repeat the analysis. The court’s specific ruling is as follows: “we hold that the Code § 65.2-708(A) statute of limitations runs anew under each successive award of compensation for a particular compensable injury and is triggered on the last day for which compensation was paid.”
The court resolves a dispute over the definition of proceeds in Riverside Healthcare Ass’n v. Forbes, involving a revocable trust that included real property. Forbes set up a self-directed inter vivos trust that listed herself as the beneficiary and Riverside as the remainderman. The income and proceeds from the trust were to be paid to her during her lifetime, with the principal paid to Riverside upon her death. In 2008, the Commonwealth condemned a portion of the real property in the trust and paid compensation for it. The issue in this case is whether the money received in that transaction is to be treated as principal or interest.
Normally, the Uniform Principal and Income Act would give us a definitive answer; it states that funds received from eminent-domain proceedings are treated as principal. But that act states that if there’s a contrary provision in a given trust document, then the trust document should be enforced. That happens here, as first the trial court and now the Supreme Court find that the language of this trust requires that all monies “generated from or by the trust property and/or any proceeds from the trust property” be treated as income. The court notes that the term proceeds includes monies received in exchange for property in a sale, so these funds are income in this instance.
In a related ruling, the court gives Riverside what looks like a small victory, reversing a ruling sustaining a demurrer on a request for an equitable accounting. The trial court had ruled that Riverside had already received the equivalent relief by getting a copy of a court-ordered statement from the trustee, showing receipts and disbursements. Since that statement wasn’t attached to the pleadings or incorporated into any of them, it was improper to rule on a demurrer by reference to the statement. Reading between the lines here, I suspect that this will be a short, technical victory by Riverside; what cannot be done by demurrer can often be done by summary judgment, and this case may well have a short shelf life on remand.