ANALYSIS OF AUGUST 18, 2022 SUPREME COURT OPINIONS
(Posted August 18, 2022) Today is the 53rd anniversary of the closing of Woodstock. It was supposed to end the previous day, Sunday, August 17, 1969; but Zeus intervened, dumping rain throughout the weekend. That rain pushed the schedule back so that the final act, Jimi Hendrix, took the stage just after sunrise on Monday the 18th.
You can probably win a bar bet with this: Hendrix wasn’t the festival’s executive producer’s first choice to close the stage. That first choice turned down the opportunity, so those few fans left on Max Yasgur’s dairy farm that Monday morning heard Jimi perform “Hey Joe” as the last tune from the stage.
The producer’s preference was to have Roy Rogers take the stage at the very end and perform “Happy Trails.” No, really.
I’ve mentioned here recently that most circuit court judges don’t mind so much if an appellate court reverses them. That’s part of the job. What they hate-hate-hate is a remand for further proceedings. Once they finish with a given case, they want to be done with it forever.
In that vein, a northern Virginia judge is probably kicking himself this morning after seeing the opinion in Ames Center, LC v. SOHO Arlington, LLC. It’s a declaratory-judgment action to ascertain what rights a neighbor has over adjacent hotel property in Arlington.
The hotel is run by a company that holds a ground lease on the land. The lease contains an unusual provision: If any neighboring properties plan to excavate nearby, the hotel operator has to allow that neighbor onto the hotel premises to permit the excavating activities.
The appellant here, Ames, is one such neighbor. It planned to develop its property with two 30-story buildings, and needed access to the hotel property to prepare its development plans. Ames notified the hotel’s owners of its intent to enter for this purpose. That generated this response:
After learning of Ames’s intentions, SOHO’s counsel informed Ames that “no one from your company is welcome within the hotel or on the grounds of the property, for any reason.” If any Ames representatives entered the SOHO property, counsel added, SOHO “will contact authorities to have such individuals removed for trespassing” and “will take full advantage of all actions available to it under the law, both civil and criminal.” A subsequent letter from SOHO’s counsel specifically warned Ames not to use a construction crane that may “swing” over SOHO’s airspace. SOHO further advised that it would be “vigilantly monitoring the project activities and [would] seek recompense for any trespass or damages that may occur.”
Well, now. Where I come from, we’d call that an “actual antagonistic assertion and denial of right.” The hotel warns the neighbor, “If you or your boys set one foot on our property, we’re gonna sic the law on ya.”
Hence the DJ proceeding. The neighbor sued to determine if it was indeed an intended third-party beneficiary of the lease provision and could enforce the right to enter. After a hearing, the circuit court ruled that the provision did protect the neighbor. But when the parties asked the court to declare what specific rights the neighbor enjoyed, the judge replied, “Not my job. This is just a suit to determine if you’re a 3PB, and I’ve made that decision.” The court then dismissed the suit without interpreting the contract.
I’ve telegraphed the result of the ensuing appeal: The Supreme Court sends the case back for a ruling on what rights the neighbor has. There’s no indication that the hotel owners cross-appealed the ruling that the judge did make. But the justices rule today that the circuit court stopped short of performing the function of DJ actions: to declare what the parties’ rights are.
In theory, the Supreme Court could have gone ahead and declared those rights itself instead of remanding. After all, the interpretation of a contract is a legal matter, to which a reviewing court affords no deference to the decision below. The Supreme Court often takes the initiative to enter final judgment instead of remanding for purely legal rulings. See, for example, McGinnis v. Commonwealth, 296 Va. 489, 501 (2018), and its many jurisprudential cousins.
Today’s opinion mentions the possibility of a jury trial, and if there truly are disputed fact issues, then remand is absolutely the correct course. I just don’t know what facts would be necessary to decide what rights a contract provision confers on a third-party beneficiary. At least one judge up in Arlington will find out.
I occasionally mention here that the subject matter of a given appellate decision is bone-dry, so I have to do what I can with the prose to hold your interest through the course of a detailed trek through the rulings. This morning, the court hands down Appalachian Power Company v. State Corporation Commission, an appeal with lots of zeroes at stake and plenty of interest among those who advocate for consumers.
I know my own limitations. Having read the opinion, there’s no way I can do it expository justice in a reasonable number of words, and no meaningful way for me to hold your interest through a detailed discussion. Want proof? Behold this one paragraph, setting out what the SCC ruled in the rate-review process:
Following the evidentiary hearing on Appalachian’s triennial-review application, the Commission found that “Appalachian has not established that it was reasonable to conclude in December 2019 that the remaining costs of these retired units were no longer probable of future recovery” for the purposes of recording them as asset impairments. J.A. at 5914-15. The Commission also rejected Appalachian’s argument that the Commission had no discretion to review Appalachian’s decision to record the asset impairments. The Commission reasoned that “[i]n every historical earnings review under [Code § 56-585.1], the Commission has necessarily been required to rule on the reasonableness of the utility’s regulatory accounting entries, along with other proposed regulatory adjustments from both the utility and case participants.” Id. at 5914. After the Commission has determined the reasonableness of these entries and adjustments, Code § 56-585.1 dictates certain outcomes.
You got all that? Unless you’re an accountant or a tax jock, the rulings in today’s 43+-page opinion (including a short partial dissent by Justices Mims and Powell) will bring glazed, watery eyes. I therefore do not choose to inflict the appeal upon you. Instead, mourn for poor Justice Kelsey, who drew the short straw and had to write the majority opinion here. If you’re feeling mean and want to give it a try, have at it; the slip opinion is just a mouse click away.
The outcome of the appeal is a partial win for APCO on its appeal, and a wholesale loss for the OAG’s Division of Consumer Counsel on its separate appeal. (The court combines the two appeals into a single opinion.) The Supreme Court remands the case – that’s two remands in one day! – to the Commission to correct one error. That correction will presumably result in an outcome that’s more to APCO’s liking.
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These two decisions reduce the court’s list of argued-and-undecided appeals to five. There are two outstanding from the June micro-session, plus one each from April, March, and January. The September docket, which currently lists just seven appeals, will add to this. But this is the closest that I can remember to the court’s fully clearing its argued cases since it transitioned to rolling release dates in late 2015.