ANALYSIS OF DECEMBER 17, 2015 SUPREME COURT OPINIONS
[Posted December 17, 2015] The Supreme Court of Virginia hands down two published opinions today in appeals argued in the November session. Because the Clerk’s Office will be closed December 24 and 31, these may prove to be the last opinions of 2015.
In a development that has to be frustrating for the litigants, Wetlands America Trust v. White Cloud Nine Ventures isn’t among today’s releases. That case is the lone remaining unresolved appeal from the court’s September argument docket.
Public employment law
Some of the lasting consequences of a felony conviction are well-known by the public. The two most commonly recognized are that you can’t vote and you can’t carry a firearm. Today, in Butler v. Fairfax County School Board, we learn of another.
Butler was convicted of a felony drug offense in 1992. She evidently did a good job of turning her life around thereafter; by 2000 she had been licensed to teach by the Board of Education. Six years later, and with full knowledge of the long-ago conviction – Butler disclosed it on her application – the Fairfax School Board gave her a job.
This is looking like a classic American feel-good story about a fall, atonement, redemption, and reabsorption into society. But conflict arrived in 2012 when an assistant superintendent looked at a state statute and felt that the felony conviction disqualified Butler from her job. Here’s the relevant portion of the statute:
As a condition of employment for all of its public school employees, whether full-time or part-time, permanent, or temporary, every school board shall require on its application for employment certification (i) that the applicant has not been convicted of a felony or any offense involving the sexual molestation, physical or sexual abuse or rape of a child; and (ii) whether the applicant has been convicted of a crime of moral turpitude.
Code § 22.1-296.1(A). That law seems to require, as a condition of hiring, that the applicant certify that she’s never been convicted of a felony. After a hearing before the school board, the parties agreed to seek a judicial ruling. The trial court, ruling on cross motions for summary judgment in a declaratory-judgment action, found that the statute disqualified Butler from her job. The justices agreed to take a look.
Today the Supreme Court affirms. Turning aside a suggestion that the statute is ambiguous, the court applies its plain meaning: applicants must certify that they have “not been convicted of a felony or any offense involving sexual molestation,” etc. Butler obviously couldn’t do that, because “A felon cannot make such a certification.” The court finds that this fact deprived the school board of the authority to hire her.
Butler argued that the statute should only apply to felonies involving sexual molestation, physical or sexual abuse, or child rape. But Justice Mims, writing for a unanimous court, correctly applies the rule of the last antecedent – familiar to all of us grammar geeks – to conclude that those modifiers only apply to the word offense, not to felony.
There’s one interesting angle in the court’s discussion of ambiguity. Butler looked to the statute’s title – “Data on convictions for certain crimes and child abuse and neglect required; penalty” – and argues that that creates an ambiguity that should be resolved in her favor. Most attorneys know about the headline statute, Code §1-217, which states that headings aren’t part of the statute. And the court ultimately applies this to reject Butler’s contention. But Justice Mims points out that another type of heading, the one in the General Assembly’s enactment, is indeed a valuable resource in interpreting the meaning of a statute.
This distinction, while is may seem arbitrary, has an understandable origin. The title of a bill is part of the legislative enactment; in theory, at least, both houses of the General Assembly have voted on it and the Governor has presumably signed his name to it. The headers in the Code, in contrast, are drafted by the Code Commission, and that isn’t a valid place to look for the legislature’s intention.
The court finally rejects Butler’s estoppel argument, based on the board’s initial decision to hire her. The justices note that she made no showing of prejudice, such as her turning down a higher-paying job. But even if she had, the court rules that the board didn’t have authority to hire her, so estoppel wouldn’t apply.
I think I detect a subtext to today’s opinion, that the court would like to rule the other way if it could. The court nowhere comes out and says that Butler is unworthy of a teaching position, despite all she’s done to rehabilitate herself. That’s because the justices can’t even consider that. They’re applying a statute, and must accept the legislature’s policy decision that we won’t have any felons teaching (or indeed working; the statute isn’t limited to teachers) in our schools.
If I’ve rightly read between the lines, I’ll set out here that I, too, think this statute deserves a fresh look. We all know that years ago, legislators were falling all over themselves in a rush to propose more and stricter tough-on-crime bills, based on the political climate of the day. That had some unintended consequences in other areas; for example, the abolition of parole and the addition of mandatory-minimum sentencing generated a significant rise in the prison population, one that the legislature didn’t proactively address by budgeting for more prisons.
In a case like Butler’s, this might also be one of those unintended consequences. A drug conviction isn’t a good thing, of course; but should it bar a person from public-sector employment for life? Are some offenses so unforgivable that we’re willing to continue to punish folks forever, even after they’ve paid their debt to society and turned their lives around?
Please don’t mistake me for a bleeding-heart liberal in criminal cases; indeed, if I were a trial judge, the last place many criminal defendants would want to see me is at a sentencing hearing. And no, I’m certainly not advocating opening up gun possession to violent felons. But a situation like this might be the draconian example that prompts someone on Capitol Square to take a new look, to decide if this statute goes too far.
The other case decided today enables me to intone a holy phrase: golf course.
Golfers here in Tidewater know well the troubled story of the Battlefield Golf Club in Chesapeake, which is the subject of CPM Virginia, LLC v. MJM Golf, LLC. The course was built on filled land, and the property’s initial developer, CPM, used fly ash obtained from Dominion Virginia Power. Fly ash is a waste substance but isn’t classified as hazardous waste. Nevertheless, we don’t want it escaping into the environment, so the developer undertook to cover it with at least 18 inches of topsoil.
In 2006, the property’s developer entered into a contract to sell the property to another company, MJM, which would build the golf course and operate it. (From here forward, I’ll refer to the two companies, who are the parties in today’s appeal, as the buyer and seller.) Their agreement bore the prodigious title, “Golf Course Development Agreement and Contract for Sale & Purchase of Real Estate.” The sale was seller-financed, with what looks to be a balloon payment in 2013. That would give the buyer almost seven years to make money.
The contract contained a warranty provision that’s at the heart of today’s dispute. It’s so long – 113 words, by Justice Kelsey’s count – that I refuse to inflict it upon you in its original form; I hate run-on sentences. But his honor bestows a great boon on we the readers, by breaking the provision into four relevant components. Here they are, from page 6 of today’s slip opinion (the italics are the court’s, not mine):
- Except as disclosed in writing, Seller [CPM] represents and warrants that during the period of Seller’s ownership of the Property, there has been no use, generation, manufacture, storage, treatment, disposal, release or threatened release of any hazardous substances by any person on, under, about or from the Property;
- Seller has no knowledge or reason to believe there has been any breach of any environmental laws;
- and Seller is aware of no use, generation, storage, treatment, disposal, release or threatened release of any hazardous substance on, under, or from the said Property by the prior owners or occupants;
- Seller knows of no litigation or claims of any kind by any person related to such matters.
Against this backdrop, you need to know that after the closing early in 2007, and the course’s opening later that year, it rained here in the southeastern corner of the Commonwealth. It rained hard enough that people started looking up how long a cubit is, just in case. When the clouds cleared, the golf course’s superintendent discovered patches of freshly exposed fly ash. The topsoil hadn’t held.
We’ll now zoom forward to 2013, when the balloon payment did not arrive. That led the seller to file suit. The buyer counterclaimed, contending that the seller had breached the warranty, causing the club to suffer financially, and requiring the buyer to expend millions of dollars in remediation.
The circuit court elected to bifurcate the trial and hear the counterclaim first, reasoning that if the seller breached the warranty, it wouldn’t be entitled to relief anyway. After a trial, the court ruled in favor of the buyer, finding that the seller breached the warranty by failing to ensure that there was 18 inches of topsoil above the fly ash. That fact meant that not only was the buyer entitled to $700K in damages, it could – brace yourselves – rip up the promissory note for the sale price.
Before I get to the Supreme Court’s analysis, I’ll address one issue that merits only a footnote in today’s opinion. That $700K had already been reimbursed by a very deep pocket, none other than Dominion, which had made the buyer whole for certain expenses. The buyer sought what looks awfully like a double recovery here, asking the seller to pay what Dominion had already paid. And the trial court bit, awarding that damage without reduction, based on the collateral-source doctrine.
Because of the way it resolves the case, the Supreme Court doesn’t have to decide this issue, but it points out that it has never applied the collateral-source rule in contract cases; it’s for tort cases only. The justices hint strongly that if they reached that issue, the buyer was going to lose the damage award based on that rule.
On the merits, the justices unanimously reverse, holding that there’s no proof that the seller ever breached anything. Looking at the language in the four bullet points above, there’s no express requirement for the seller to place 18 inches of anything, anywhere. The buyer conceded that fly ash isn’t a hazardous substance, so the first and third bullets won’t justify the trial court’s finding. The fourth dies the same death, since it covers litigation “related to such matters.”
That leaves the second bullet. So you won’t have to scroll up to see it again, I’ll repeat the critical text here: “Seller has no knowledge or reason to believe there has been any breach of any environmental laws.” Justice Kelsey goes back to Advanced Traditional Grammar class to point out that the phrase has been is in the present perfect tense, indicating actions that occurred in the indefinite past, up to but no later than the present.
That point of grammar not only matters; it’s case-dispositive. The only warranty that this could create is one relating to the state of the property before, or possibly at, the time of closing in early 2007. The seller never undertook to warrant things that would happen in the future. Since the buyer never even pleaded that the claimed defect existed at the time of closing, this cannot be a breach of warranty.
The court addresses two other arguments raised by the buyer. First, the contract warranted that the property complied with applicable zoning and planning laws. But this isn’t a zoning issue, and the language doesn’t specify environmental laws. Second, the buyer pointed to the contract’s non-merger clause, stating that the obligations in the contract would survive closing and could still be enforced thereafter. But that clause doesn’t create new rights; it only extends previous ones. Since the warranty claims failed on the merits, this clause can’t help.
The court remands the case for trial on the seller’s claims. Those include damages for nonpayment of the note, of course; but the seller also has a right to buy back the golf course for whatever the buyer has put into it. I don’t know the numbers, but that could produce a significant windfall for the seller if it wins.
Before I close this analysis, I’ll mention one important appellate note that appears toward the end of today’s opinion. The buyer attempted to rely on a contract with a third party as support for its contention that there was a warranty obligation. Before trial, that contract had been introduced as an exhibit in a deposition, but it was never offered at trial, so it didn’t make its way into the record.
In assembling the appendix, the parties are supposed to stick to “parts of the record” (Rule 5:32(b)). Since this contract wasn’t in the record, the buyer simply attached it as an addendum to its brief of appellee. This gets the buyer a stern judicial finger-wagging: “It is improper for a litigant to present to an appellate court evidentiary documents outside the trial court record, except in cases, unlike this one, in which judicial notice is appropriate.” Since the existence and terms of an extrinsic contract aren’t even remotely appropriate for judicial notice, the court doesn’t consider it today.
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Today, then, we have two cases that turn on grammar. Butler implicates the rule of last antecedent, and CPM Virginia generates a discourse on the present-perfect tense. Speaking as a word-nerd, is this a great day, or what?