ANALYSIS OF JANUARY 13, 2006 SUPREME COURT OPINIONS
Today, January 13, the Supreme Court hands down 22 published decisions in a variety of case areas. The following essay discusses this morning’s decisions and analyzes their likely impact on the practice of law in the Commonwealth.
A divided court affirms the ruling of the Court of Appeals in Commonwealth v. Cary, involving issues of self-defense in the context of a murder charge. Cary and the victim had a long-term relationship, in which he repeatedly physically abused her. On one such occasion, Cary picked up a gun and shot and killed the victim. At trial, she contended that she had acted in self-defense, and offered a jury instruction on that doctrine. The trial judge declined to admit the evidence and refused the instruction, holding that Cary did not establish a sufficiently overt and immediate act or threat to justify her use of deadly force.
The Court of Appeals reversed in 2005, finding that the evidence should have been admitted and that the instruction should have been given. Today, the Supreme Court affirms that ruling, finding that the evidence as adduced (note that this means without the excluded evidence) justified the giving of the instruction. The court gives the Commonwealth a hollow victory by finding that the proffered evidence was properly excluded, due to a procedural default at trial. But it notes that this aspect of the ruling will likely be mooted when the case is retried. (Few things are more welcome to trial lawyers than more or less specific instructions on how to retry their case.)
This decision will inevitably be seen as a victory for women’s rights advocates, but it offers lessons for trial and appellate lawyers as well. The court’s discussion of the substantive issue relating to the instruction includes a very useful review of the law relating to when a threat is sufficiently imminent as to justify the use of deadly force. Appellate lawyers will note that the court declined to address several issues on which the Court of Appeals had spoken, finding that to do so in anticipation of a retrial, where the evidence would likely be different, would be advisory and unnecessary.
Justice Koontz authors the opinion for a five-justice majority; Justice Agee files a dissent urging reversal of the Court of Appeals (and reinstatement of the conviction), and is joined by Justice Kinser.
The court treats Court of Appeals precedent equally deferentially in the other criminal appeal brought by the Commonwealth. In Commonwealth v. Neely, it finds that Code §19.2-303 gives the trial court continuing jurisdiction over a criminal sentence, despite the passage of 21 days that is normally fatal to trial court jurisdiction under Rule 1:1.
Neely had been given a suspended sentence in state court on drug charges. During his probation, he was arrested on federal charges, and was sentenced to federal prison. When that happened, his probation officer moved to revoke the suspension of the original sentence. Neely claimed that the trial court could no longer do that after the passage of 21 days.
The Court of Appeals affirmed the trial court’s determination that it retained jurisdiction pursuant to the statute. Today, the Supreme Court affirms in a per curiam opinion, on the grounds specified in the Court of Appeals’ opinion.
Foster v. Commonwealth presents an issue relating to the intersection of two parallel Code provisions. Foster was charged in 2003 with writing a bad check 14 months earlier. She did not deny that she had written the check or that it was made of rubber; she simply claimed that the prosecution was barred by the one-year statute of limitations for misdemeanor prosecutions. The Commonwealth argued that the five-year special statute relating to petit larceny prosecutions should apply. Foster answered that she was charged under the Bad Check Law, not with petit larceny.
The trial court declined to adopt this line of reasoning; it convicted her and sentenced her to 12 months in jail, with all but 14 days suspended. The Court of Appeals affirmed the conviction, and today the Supreme Court makes it unanimous, finding that a prosecution under the Bad Check Law for a check under $200 is, by definition, one for petit larceny, so the five year limitation period applies.
Foster tried one approach that seemed destined to fail; she relied on the headline of the petit larceny statute to indicate the crimes to which it applies. In doing so, she missed an elementary rule of statutory interpretation. Section 1-217 specifically provides that the headlines are for the convenience of the reader, and “do not constitute part of the act of the General Assembly.”
The final criminal appeal decided today is Overbey v. Commonwealth, involving possession of a firearm by a convicted felon. In order to establish the required predicate offense, the Commonwealth reached back in time to find an adjudication from Juvenile Court against Overbey, in which he was charged with statutory burglary and petit larceny. The records of the JDR Court proceeding were, as one typically finds, somewhat informally kept, and reflected that Overbey had made a “plea of guilty” and after a sentencing report, was sentenced to 12 months in jail. There was no specific mention of which offense he had pleaded to (note that the record did not say “pleas of guilty”) or of which he had been convicted.
The trial court nevertheless found that the predicate offense was established, and convicted Overbey; the Court of Appeals affirmed. But today, the fates (and the justices, at least metaphorically) smile on Overbey, and his conviction is reversed. The crucial part of today’s opinion is this quotation from last year’s opinion in Palmer v. Commonwealth: “When the fact of a prior conviction is an element of a charged offense, the burden is on the Commonwealth to prove that prior conviction beyond a reasonable doubt.” (Emphasis supplied) Here, since the JDR record was susceptible of at least two (actually, three) possible interpretations on which charge(s) Overbey was convicted of, the Commonwealth did not establish by the required standard of proof that he had been convicted of a felony. The court directs final judgment in Overbey’s favor.
In a decision that may produce a dramatic effect on the way in which many civil suits are tried, the court finds today that a Rule 4:10 physical or mental examination can serve as the basis for a medical malpractice claim. The case is Harris v. Kreutzer.
Harris was injured in an auto accident. She filed suit, and was ordered to undergo a Rule 4:10 examination to evaluate the existence and extent of any injury to her brain. During the examination, she contended that Dr. Kreutzer treated her in an abusive manner, raising his voice at her and asserting that she was malingering and faking. She then filed suit against Kreutzer, contending that he had exacerbated her mental condition by his actions and comments.
The fundamental issue here, one of first impression in Virginia , is whether a Rule 4:10 exam gives rise to a patient/physician relationship so as to enable the patient to sue for medical malpractice. The court determines that it can, although the grounds for any such liability are carefully circumscribed. The doctor owes the patient a duty not to injure her in the course of the examination itself; he cannot be held liable for, e.g., a misdiagnosis or the failure to diagnose her condition.
Harris also brought a claim of intentional infliction of emotional distress; the court affirms the trial court’s decision to strike that count for Harris’s failure to plead outrageous conduct by the doctor or severe resulting emotional distress. In this sense, pleading requirements for intentional infliction claims are not the same as the general notice pleading requirements in tort cases. To make out an intentional infliction claim, a plaintiff must plead the specific facts upon which she relies in asserting liability and damage. Since the facts asserted by Harris did not meet either threshold, that claim is dismissed.
My initial view is that this decision may well have a chilling effect on the willingness of physicians to perform these evaluations, typically at the behest of insurance companies. While the overwhelming majority of such examinations no doubt come off without a problem, the threat of professional liability may tip the balance when a given physician is deciding whether to perform such an examination.
The court takes up the issue of multiple defendants for a single indivisible injury in Cox v. Geary, a legal malpractice claim brought by a man who had been wrongfully convicted and imprisoned for 11 years. Cox was the beneficiary of special legislation to compensate him for the injury he suffered (wrongful incarceration) and was paid out of the state treasury; he signed a release running in favor of the Commonwealth and its agencies and employees. That didn’t stop him from filing a legal malpractice claim against his trial and appellate lawyers in which he sought separate compensation for the same injury.
The trial court dismissed the case, holding that Cox had suffered “one indivisible injury for which he had but one claim or cause of action.” On appeal, the Supreme Court affirms this holding. While the release of one tortfeasor does not operate to release others, Cox’s damages in the two claims were identical. Thus, in this context, he was barred from suing his lawyers to recover damages for the injury for which he had already been compensated.
One of the largest cases of the day, in terms of pure numbers, is Gov’t Micro Resources v. Jackson, a defamation claim by an executive in a government contracting company. Jackson, who had an impeccable reputation in his field, was hired by Gov’t Micro to turn the struggling company around. When he took over, he discovered a number of disquieting things, principally related to the financial position of the company, which was nowhere near as strong as he had been told before his hire.
Relations between Jackson and the company deteriorated, and he was terminated the next year. At the time of his firing, one of the company’s senior executives placed two calls to a fellow company in the industry, in which he stated that Jackson had to be let go because, among other things, he had lost $3 million for the company. (This coincides roughly with the financial shortfall Jackson discovered when he took over; it clearly was not Jackson ’s doing.) These statements figured prominently in Jackson ’s ensuing defamation suit against the company and the executive. Claiming that he had been damaged in his employment prospects, he sought seven figures in a jury trial.
He got seven figures, all right; the jury tried to hand him $5 million in compensatory damages, $1 million in punitives, and another $200,000 in damages for another claim. The trial court, however, reined in the jury’s award, reducing the punitive award to the $350,000 cap and ordering remittitur of the compensatory award to $1 million. Jackson accepted the remittitur under protest and appealed.
Today, the Supreme Court reinstates the jury’s verdict, affirming the underlying factual findings and legal holdings in the process. It finds that the executive’s statements were made with actual knowledge of falsity; that they were not expressions of opinion, and that they were not privileged. The case is a useful reference material as the court’s most recent pronouncement in this frequently litigated field.
Bowie v. Murphy is another defamation case, this time arising in the context of a dispute at a church. Bowie claimed that he was assaulted by a church member who was dissatisfied with what he was doing as one of the church’s deacons; he also filed defamation claims against the same member, plus the pastor and other members.
When things go bad in God’s house, the courts generally do not get involved, bowing to the church’s autonomy in ecclesiastical matters. The trial court accepted that principle in dismissing the defamation counts, finding that they arose in the context of a personnel and membership dispute in the church. It also dismissed the assault count because the deacon did not allege that he had sustained a physical injury.
On appeal, the Supreme Court reverses. It finds that the defamation claims can be adjudicated without treading on the church’s turf, since the claims principally arose out of allegedly false statements made to police officers and other members of the congregation about the alleged assault. These are in no sense church doctrine; they’re merely garden-variety criminal assault charges. The underlying assault claim is also reversed, since a physical injury is not an element of the tort of assault. The deacon properly pleaded that he was placed in fear of imminent physical danger. That was all that was required.
Justice Agee files a partial dissent, in which Justice Kinser joins. He argues, persuasively in my humble view, that defamation claims against two of the defendants should have been dismissed. The only statements those two defendants allegedly made were to make a motion at a church meeting for certain disciplinary action against the deacon, and to second that motion. The dissent finds these two statements, unlike those surrounding the assault, to be inextricably connected with church governance.
When a law fights a law, the courts are generally called upon to clean up the mess. That’s the case with today’s opinion in Sexton v. Cornett, an estate dispute involving the statutory provisions relating to augmented estates and retirement and life insurance benefits.
In this case, the dispute arose when James Sexton died without issue in 2003. He had few assets; principally just his Virginia Retirement System life insurance and pension benefits. Under ordinary circumstances, his wife would be entitled to half of the value of those assets under the augmented estate provisions enacted by the General Assembly in 1990, despite the fact that divorce proceedings were pending at the time of James’s death. But if this were an ordinary circumstance, we wouldn’t be having this cyber-conversation.
James, no doubt feeling the sting of the divorce, had tried to frustrate his wife’s interest in the assets. Two months before his death, he changed the designation of his beneficiary of his VRS assets to his sister and niece. After his death, his widow filed a motion asking the court to declare that the assets were part of the estate; she asked the court to require the sister and niece to return one-half of the value (equating to her elective share).
The trial court decided that, although the assets were part of the augmented estate, there was no way to compel their return, since VRS benefits are specifically exempted from any and all legal process – you can’t garnish them; you can’t levy upon them. The court thus ruled in favor of the sister and the niece.
On appeal, the Supreme Court took a slightly different tack, but still confronted head-on the issue of which statute takes precedent over the other. It finds today that the specific and narrow VRS exemption was not impliedly repealed when the (broader) augmented estate statute was enacted. And since the narrower statute trumps the broader in statutory construction, the court determines today that the assets are not part of the estate. It thus affirms the trial court, albeit on different reasoning.
The other estate case handed down today is Schmidt v. Wachovia Bank, involving two wills drafted in the World War II era. Mr. and Mrs. Schmidt left reciprocal wills in which they each made provision for their two children, although on slightly different terms. After they both died in the 50’s, their children began receiving specified benefits from two trusts set up in Mrs. Schmidt’s will. When those children died recently, a dispute arose over the distribution of the corpus of the trusts; somehow, among all the detail in the two wills, no one wrote down what happens to the trust assets once both beneficiaries died.
Today’s decision depends on the application of the early vesting doctrine, which is favored under Virginia law. The Schmidts’ grandchildren fought the application of the doctrine, while two beneficiaries outside the family urged its application, under the terms of which they stood to gain half of one trust’s assets. The specific holding in today’s ruling is that a specific intention not to apply the doctrine must be found if it is to be avoided, and the creation of a spendthrift trust is not sufficiently specific, standing alone. The court thus affirms a trial court ruling in favor of the “outsiders” on this point. Senior Justice Stephenson dissents, arguing that the creation of the spendthrift trust here is entirely inconsistent with a preference for the early vesting doctrine. He also notes that the Schmidts clearly wanted to keep their money within the family, something that today’s decision avoids. In his most urgent language, he writes that “the Testators were very careful to avoid the result reached by the majority.”
Venue issues are particularly common in cases arising in and around Richmond , particularly given the dramatic demographic differences between the City itself and the surrounding counties. Today, the court decides one such dispute, in Barnett v. Kite, a tort suit arising out of “a physical altercation” (or in non-legal terms, a fistfight). Kite and Barnett got into such a fight near Kite’s home in Powhatan County . Kite decided to file suit, but did so in the City of Richmond , reasoning that the jury pool might be more favorable to him there. Barnett objected to the venue, since he lived in Chesterfield County , and the case had no nexus with Richmond . Kite responded by citing the provisions of Code §8.01-262(3), which authorized such suits to be brought wherever the defendant “regularly conducts affairs or business activity.” (The statute has recently been amended to require substantial business activity.)
The trial court denied Barnett’s objection and convened a trial within the boundaries of the Holy City . That got Kite what he was looking for: A jury verdict for $260,000 compensatory and $25,000 punitive damages. On appeal, Barnett again raised the venue objection.
Today, the Supreme Court reverses and orders the Richmond court to find a suitable alternative. It analyzes the basis on which Kite had defended his venue choice and finds it wanting. Kite asserted that Barnett’s heating and air conditioning company, of which he was the 51% owner and president, regularly conducted affairs in the City of Richmond . But that wasn’t enough, the court rules today, for the predictable reason that the defendant was Barnett, not his company. Since the trial court did not make a finding that the company’s corporate veil should be pierced, it was error to consider the company’s business dealings when analyzing the affairs of an individual.
Most trial lawyers are familiar with the provisions of former Rule 3:3 (now Rule 3:5(e), which provides that no judgment may be entered against a defendant who is served with process more than one year after the date suit is filed. The court today evaluates whether an objection based on that rule may be raise after a defendant enters a general appearance, in Lyren v. Ohr. There, Ohr was served some 13 months after Lyren filed suit. But his answer and grounds of defense did not raise the bar of Rule 3:3; he was repeatedly assured by Lyren’s attorney that process had been duly and timely served. In a subsequent hearing, the trial court decided to dismiss the case based on this default by the plaintiff.
On appeal, as in the trial court, Lyren argued that since Ohr entered a general appearance and did not contest the late service until well after the pleading to the merits was filed, the objection was waived. This time, the seed of Lyren’s argument found fertile soil.
The Supreme Court reversed today, finding that the bar of Rule 3:3 is subject to the requirement in §8.01-277 that objections related to the issuance or service of process must be filed “prior to or simultaneously with the filing of any pleading to the merits.” (This raises an important side issue that may not be appreciated by many trial lawyers: In circumstances like this, where a statute prescribes a pleading rule, the Supreme Court is not free to waive it or modify it. This is why some of the deadlines in the appellate system are regarded as mandatory and jurisdictional, while others are not. End of digression.) Ohr didn’t raise Rule 3:3 until several months passed after the filing of its general reply. That means that the defect, patent as it was, is considered waived. The case is remanded to the trial court for, well, a trial.
Sharp dispute arises on the court regarding the definition of good faith in a commercial setting in the case of Johnston v. First Union NB. The Johnstons bought some property in 1985 and mortgaged it with a predecessor bank to First Union. Using the coupon book given to them by the bank, they made periodic payments as listed on each coupon. On occasion, when they paid late, they added the indicated amount of a late charge to their check.
Trouble started just as the Johnstons were anticipating the date of their last payments. With but one year left to go, Mrs. Johnston “noticed a discrepancy between the principal balance remaining on the loan as shown on a statement received from the Bank and the much lower balance shown by her own records.” She checked with the manager of her bank branch, who promised to get her a statement showing the payment history and how the payments were applied. This statement eventually arrived, but it was undecipherable for the unfortunate customer. Her subsequent attempts to get some explanation from the bank were unavailing.
In 2000, Mrs. Johnston went to the bank, stood in line, and then approached a teller. She presented her coupon book, now with only two coupons left, and stated that she wanted to pay the loan off. She wrote a check for the last two payments and laid the book before the teller. The teller confirmed the account number and then accepted the book and the check, depositing the funds into the bank’s account.
The tiny tidbit that I omitted from the last paragraph was that before she handed over the check, Mrs. Johnston wrote on the memo line,”Acc’t Paid in full.” Either the teller didn’t notice these words, or she didn’t appreciate its import. The bank, however, despite the receipt of the funds, didn’t consider the account to be paid in full; several months later, it started sending nastygrams to the Johnstons about the $5,000 delinquent balance on their loan. This course eventually resulted in the sale of the property at foreclosure (the bank was the purchaser). The Johnstons sued, asking the court to determine that the loan had been, as advertised, “Paid in full.”
Such a claim is based on the provision in the UCC for accord and satisfaction, which indicates that under certain conditions, an individual acting in good faith can extinguish a debt in this way. The trial court wasn’t satisfied of Mrs. Johnston’s good faith, however; it noted that she bypassed talking to the bank manager when she came to pay off the loan, and spoke to a blissfully ignorant teller. Since she neither spoke with the manager nor informed the teller that there was a dispute about the amount left to be paid, she could not claim the benefit of the statute.
Today, a sharply divided Supreme Court reverses, holding that the trial court’s determination that the customer did not act in good faith was supported by “no evidence in the record.” It also rejects the trial court’s finding that the teller had none of the relevant facts, calling that determination “conjecture.” The decision means that the loan is indeed paid in full, and that the sale and the deed of foreclosure are both void.
Justice Keenan, writing in dissent, sees dark clouds behind this ruling. She notes that Mrs. Johnston’s actions hardly met the standard of good faith, since she knew about the dispute but blithely submitted a “Paid in full” check anyway. Joined by Justices Koontz and Lemons, she contends that today’s holding will inevitably water down the meaning of good faith, to the point that the objective test that has existed until now can be replaced by the debtor’s “firm belief” in the merits of his position. That, she contends, will be bad for the way business is conducted in the Commonwealth.
In the other commercial law case decided today, the court reverses a trial court’s order sustaining a demurrer to a warranty claim. The case is Hubbard v. Dresser, Inc. Hubbard operates a gas station in Covington , and ordered two replacement diesel pumps from a distributor; Dresser was the manufacturer. Within days after the installation of the pumps, it became apparent that they did not work properly. After fourteen months of waiting for repair or replacement, Hubbard notified the distributor and Dresser that he was revoking his acceptance of the pumps.
Based on my recollection of UCC law, waiting over a year before revoking acceptance may be problematic for Hubbard, but that factor wasn’t in issue in the subsequent (abbreviated) litigation between the parties. Hubbard sued based on breaches of express and implied warranties, seeking not just return of the purchase price (about $50,000), but $250,000 for all the trouble the defective pumps allegedly caused. Dresser demurred; the trial court sustained the demurrer and dismissed the case.
On appeal, Hubbard argued that his pleading was sufficient to state claims for both warranties. Today, the Supreme Court agrees and reinstates the case. In an opinion that is really more about pleading requirements than it is about commercial law, the court sets out what degree of specificity a plaintiff must use in setting forth a warranty claim. The trial court had held that Hubbard was required to plead the specific nature of the defect – to show exactly how the pumps malfunctioned – and to specify “the applicable standard of merchantability in the industry.” The court agrees that Hubbard has the burden of establishing both of these facts, but he can wait until trial to do so (sooner if the defendant requests the information in discovery). These proof requirements are not equivalent to pleading requirements, the court holds.
The lesson of this case is that there is no “heightened pleading requirement” for ordinary contract claims, as there is for, say, defamation claims (see the Bowie and Jackson cases discussed above). All the plaintiff must do is assert that the products were defective and that the standard of merchantability was not met; at that point, he has stated a claim for which relief can be granted. If the defendant wants more detail, he can get it in discovery.
Sexually violent predators
The court once again takes up the recent Sexually Violent Predators Act in Jenkins v. Virginia Center for Behavioral Rehabilitation. Jenkins, having been committed as a sexual predator, filed a petition for a writ of habeas corpus challenging his detention under the Act. Two aspects of this case are significant.
First, this case was filed originally in the Supreme Court, not in a trial court. In that sense, this is not an appeal at all; Jenkins started out by asking the highest court in the state to consider his case. Over the Commonwealth’s objection, the court agrees that he has a right to do just that; the Supreme Court has original and appellate jurisdiction over these claims, and there is no requirement that a petitioner start out in a trial court.
Second, today’s decision establishes that a petitioner under the Act has a right to the effective assistance of counsel, at the trial of the case and on appeal. Here, Jenkins’ trial attorney missed a filing deadline (in this case, the filing of the trial transcript under Rule 5:11 ) for the perfection of his appeal of the commitment order, resulting in the dismissal of his appeal. Under established habeas corpus caselaw, that’s ineffective assistance of counsel; in a garden variety habeas action, that would presumptively entitle the petitioner to a writ. Today, the court applies this doctrine for the first time to the SVPA, rejecting the Commonwealth’s assertion that SVPA petitioners have no right to counsel on appeal.
In case you think that’s a misprint, be assured that the Commonwealth did, indeed, argue that SVPA petitioners have no right to a lawyer on appeal. It based that argument on the fact that SVPA petitions are civil, not criminal, in nature, and reasoned that civil litigants have no constitutional right to counsel, as criminal defendants do under the Sixth Amendment. The court rejects this approach in strong language, noting that a petitioner’s liberty interest has been recognized repeatedly in the involuntary commitment context as fully justifying the right to counsel, court-appointed if necessary, for petitioners. From my own vantage point, I was a bit surprised that the Commonwealth would take a hard-line stance on this issue, which seemed almost destined to fail. But I won’t apply hindsight to evaluate this tactical decision.
The court resolves an apparent conflict between two statutes relating to government employees in Boynton v. Kilgore, a suit brought by twelve former employees in the Attorney General’s office who were laid off for budgetary reasons in 2002. The employees had claimed benefits under the Workforce Transition Act of 1995, but the trial court held that they were not covered by that statute.
On appeal, the overarching issue is who has control over the AG’s staff. That question would seem to answer itself, but it’s not quite so obvious; Virginia law clearly provides that the Governor is the “Chief Personnel Officer of the Commonwealth,” so if the general provisions of the Virginia Personnel Act , and concomitantly the WTA, apply to these employees, then the Governor has control over them for these purposes.
Today, the court resolves the issue in favor of the AG (and the Comptroller, who was also an appellee). While the ruling itself may not have widespread value as precedent, the manner in which the court resolves the issue does have significant application beyond the contours of this case. In that sense, this is a case about statutory construction.
There are several rules employed by the courts in construing apparently conflicting statutes. (For an example in another context, see the Sexton v. Cornett case discussed above.) The primary rule is that the two statutes should be harmonized if possible. The court finds today that only if the statutes are read in the way the employees urge is there a conflict. The specific conflict is created by an exemption from the VPA for government employees for whom the Constitution specifies the manner of selection. That applies to the AG himself, but not to the employees, they argued.
If they’re right on this issue, the court reasons, then we have a statutory conflict between the Governor and the AG. If they’re wrong, though, then there is no conflict. From this simple exercise, you can readily discern how the case came out the way it did. The practical application for daily practice is to look for similar conflicts in statutes you are asking your court to construe. If you find that your opponent’s argument leads to a conundrum, then you can play the Boynton card to great advantage. As an aside, it is always a good sign when your opponent has to use contorted reasoning to reach his desired outcome, while yours is a straightforward approach.
The court decides two cases involving real property. In Britt Construction v. Magazzine Clean LLC, it interprets a new provision in the state’s mechanic’s lien law. The new language in §43-4 provides that when a lienor is a general contractor, then in addition to recording a memorandum of mechanic’s lien, it must mail a copy of the memorandum to the owner, and file a certificate of such mailing.
Britt Construction was unquestionably a general contractor, so the new language, added in 2003, applied to its several lien claims against Magazzine Clean. The memoranda were filed between June and October 2004. But Britt waited until December to mail copies and file a certification. Magazzine Clean moved the trial court to set aside the liens, since the new requirement was not met at the time the liens were filed; Britt answered that the statute did not require simultaneous mailing and certification at the time the liens were filed. The trial court found in favor of Magazzine Clean and invalidated the liens.
On appeal, the Supreme Court affirms this ruling. Construing mechanic’s lien provisions strictly as usual, the court notes that the new language requires the lienor to file the required certification “along with” the memorandum. To hold otherewise, the court notes, would enable the lienor to select a time of its own choosing to notify the owner, a fact pattern the legislature clearly did not intend.
White v. Boundary Association, Inc. arose out of a challenge by unit owners to an act by a property owner’s association to assign parking spaces to individual unit owners in a set of townhouses in Williamsburg . The property was subdivided to establish the individual townhouses and a common area, which was to be owned by all owners. In 2003, the association adopted regulations assigning individual parking spaces to each unit. The Whites, who apparently preferred to park wherever they liked, filed suit to invalidate the regulations, claiming that the association had no right to divide up the common area in this way. They also sought attorney’s fees. In its grounds of defense, the association also asked the court to award it attorney’s fees.
You can imagine the situation here, with neighbors squabbling with each other over the question of who gets to park where. The trial court found in favor of the association, finding that the body had the right to “promulgate rules governing use of the subdivision’s common area.” The association got its judgment, including an award of attorney’s fees. The Whites, undaunted, left Williamsburg and headed for Richmond , not to live, but just long enough to pursue an appeal.
That turns out to be a good move, as today the Supreme Court reverses. It finds that the general grant of authority to the association did not include the right to parcel specific portions of the common area out to individual owners. Each unit owner, as a part of the bundle of rights that comes with unit ownership, gets the right to enjoy all of the common area; the Whites had the right, shared with their neighbors, to use all of that area, not just two parking spaces. The association’s action confers a “special privilege” on individual owners, which is beyond its corporate authority.
Two other matters deserve mention here. One is that the association can, indeed, validly implement a designated parking plan if it follows the right procedure and gets the affirmative votes of 65% of the owners (this provision is unique to this case, not a matter of statewide statute); no doubt it will pursue this course now. The other, of application in areas far beyond real estate law, is a rare pronouncement by the court on what I call the “Rule 3:12 trap.” That rule (now reenacted as Rule 3:11 ), allows defendants to designate certain new matters raised as affirmative defenses for reply. If the plaintiff doesn’t reply in time, the matter is deemed admitted. In a footnote to today’s opinion, the court notes that this provision only applies to affirmative defenses; the defendant can’t ask for a reply to plain-vanilla responsive pleadings.
Three contract cases are decided today, each turning on particularized language that renders them helpful in a general sense for contract interpretation, but otherwise of limited precedential value. The common theme in these cases – indeed, in a large number of cases across the spectrum today – is the court’s repeated holding that it will not rewrite contracts (or statutes) nor read into them language that was not used, nor turn to extrinsic evidence where the language used is unambiguous. Readers of today’s opinions will repeatedly encounter holdings such as, “Where the terms in a contract are clear and unambiguous, the contract is construed according to its plain meaning.”
That quoted language appears in the court’s decision in Plunkett v. Plunkett, involving reciprocal contracts to make wills by spouses. The Plunketts each signed a marital agreement containing terms for disposition of their separate and marital property. The agreement also required them to execute certain wills in order to carry out that undertaking, and thereafter not to modify or revoke the wills. Those wills were attached to the agreement. The Plunketts executed all of the documents simultaneously. When Mr. Plunkett died, a dispute arose between his widow and his children (by a former marriage) over whether the will carried out his direction in the agreement to devise property to them.
If the wills had been executed at a different time from the agreement, there might have been room to fight here. But today, the court finds that Mr. Plunkett’s will, as written, cannot breach the contemporaneous agreement. That’s because the agreement called for him to execute that specific will; he did so; and that was the will that Mrs. Plunkett admitted to probate. As the court notes, “a party cannot breach a contract in the formation of the contract itself.” The court thus reverses a trial court’s decision to entertain extrinsic evidence of testamentary intent, and its imposition of a constructive trust on the assets in favor of the children.
Cangiano v. LSH Building Company involves a contract for the purchase of 1,900 acres in Chesterfield County for development. The seller, Cangiano, undertook to convey not just the land specified, but also certain easements and additional land required for offsite improvements needed by LSH to develop the land. Trouble was, he didn’t own those lands and easements. When the deal went sour, LSH demanded performance; Cangiano responded by purporting to declare the agreement void because LSH had not satisfied certain requirements regarding financing. LSH filed a specific performance suit, including a request for attorney’s fees.
At trial, things went from bad to worse; the trial judge ruled against him, and directed LSH’s lawyer to prepare a final decree. Upon reading that, Cangiano’s new lawyer (he replaced his trial lawyer after the loss in court) objected that the requirement that Cangiano specifically perform was impossible. This was news to both the court and LSH’s lawyer, since Cangiano had not pleaded impossibility or otherwise raised the issue at trial. Nevertheless, the winning attorney agreed to amend his draft to require Cangiano only to use his “best efforts” to get the additional parcels and easements.
After this significant concession by the plaintiff, the court turned to the attorney’s fee claim. Over Cangiano’s objection, the trial court awarded LSH $258,000 in fees and costs, nearly 10% of which was for litigating the fee petition itself. Cangiano appealed.
It’s always bad news when the Supreme Court begins the analysis section of its opinion by mentioning that you have taken four different approaches to defending your case, at differing stages of the litigation. One by one, the court takes up his separate arguments and disposes of them in methodical fashion. It’s even worse news when, in discussing a separate issue (here, the attorney’s fee award), the court starts out by discarding three of your assignments of error because they were not raised below, citing the familiar slaughterer of appeals, Rule 5:25 . Cangiano meets both of these fates today, as the Supreme Court rules, in a 6-1 decision, that LSH gets to keep its specific performance decree and its attorney’s fee award. In fact, the latter will be enhanced on remand, as the trial court is directed to make a suitable award for LSH’s fees for handling the appeal.
Justice Koontz dissents in part, agreeing that LSH is entitled to equitable relief and attorney’s fees, but urging another course for the issue of the deficit in Cangiano’s property. He notes that requiring Cangiano to use his best efforts to secure additional property is essentially an open invitation to future litigation. One can readily envision Cangiano’s making an attempt to acquire the property, being refused, and then shrugging his shoulders; LSH then files suit questioning whether Cangiano made more than a halfhearted effort; and then a weary judge has to hear evidence and make the judgment call again. Koontz suggests a time-honored alternate method for resolving such a dispute, namely, the abatement of a portion of the purchase price paid, and a final end to the matter. No other justice joins him in suggesting this approach, however.
The final contract case is Ulloa v. QSP, Inc., involving noncompete and nonsolicitation clauses in an employment contract. When Ulloa fairly clearly breached the covenants in his contract by going to work for a competitor, QSP sued for injunctive relief, several damage claims, and attorney’s fees. The result of the complicated jury trial procedure was that QSP was awarded judgment. But zero damages. That didn’t stop the company from seeking an award of its attorney’s fees, and that’s where the major fireworks are in this appeal.
The trial court awarded QSP, as the prevailing party, fees and costs totaling over $690,000. That is not a misprint; it’s six hundred ninety thousand dollars. Today’s opinion notes that the pretrial development of the case was extensive and contentious, so one may readily imagine the company’s anxiety over recovering its fees. But it got the award, and began making plans to defend it on appeal. The principal issues in the appellate court are (1) the contract provision calling for attorney’s fees, and (2) whether recovering damages is a prerequisite to entitlement to attorney’s fees.
Today, the court holds that the first issue answers the second. Here, the jury instructions (to which Ulloa did not object) told the jury to find in favor of QSP if it proved that there was a contract and that Ulloa breached it. There was no mention of damages as a requirement for the jury to find in QSP’s favor. The jury found those two elements, so that, the court reasons, makes QSP a prevailing party.
Ulloa had one more card to play, and that is to claim that QSP did not prevail on all of its claims, so it should only recover that portion of the mammoth fee award that relates to its successful prosecution of its breach of contract claim. This time, the Supreme Court bites; it finds QSP’s outcome to be, “at best, marginally successful.” On several of the claims, QSP was flatly unsuccessful. Accordingly, the court remands the case for a recalculation of the fee award. The recalculated award will probably still extend into six figures, and there is no indication of whether Ulloa’s personal fortune will be sufficient to pay any such award.
In this case, too, there is a partial division among the justices; Justice Lemons, joined by Justice Agee and Senior Justice Compton, would affirm the judgment in its entirety, with the huge fee award intact. They look to the admittedly broad fee language in the agreement, which obligates Ulloa to “be responsible for all attorney’s fees, costs and expenses incurred by QSP by reason of any action relating to this Agreement . . .” That language, they argue, is not limited to winning claims, and the entirety of the fees claimed were “incurred by QSP by reason of [an] action relating to” the agreement. Since the parties are free to modify the rules relating to fee awards, they are free to specify broad language like this, too.
In Blue Ridge Service Corporation v. Saxon Shoes, the court once again takes up the issue of when and where expert testimony is admissible. This time, it arises in a fire insurance claim over damage to a shoe store. Blue Ridge is a cleaning company hired to clean several stores at the Ridge Shopping Center in Henrico County . A Blue Ridge crew arrived at 6:00 one evening in February 2001 to clean the Saxon Shoe store there. Three hours later, fire fighters were called to the store in response to a roaring fire that destroyed much of the store.
Saxon sued Blue Ridge , contending that a careless Blue Ridge employee had caused the fire by tossing a cigarette butt into a trash can in the back of the store. In order to prove this claim, it hired an expert to testify about the likely origin of the fire. The expert determined that the fire’s origin was not mechanical, so he regarded it as human in origin. (This conflicted with the conclusion of the fire marshal and Blue Ridge ’s expert, each of whom testified that the cause could not be determined.) Learning that one of the Blue Ridge staffers that evening was a smoker and that he had been seen smoking outside the building that night, he pinned the blame on the employee. The jury agreed and awarded Saxon over $5 million.
On appeal, Blue Ridge renewed its argument that the expert’s testimony should not have been admitted into evidence. It noted that no one had seen any Blue Ridge employee smoking inside the building, and contended that the expert’s conclusion that the employee must have cast the cigarette butt into the trash was pure conjecture. Key to its argument was the fact that no cigarette butt was found in the trash can.
Based on this predicate, the Supreme Court agrees, and reverses the judgment in favor of Saxon. It acknowledges that expert testimony is only admissible when (1) there is a need for the views of an expert because a layman could not be expected to interpret the facts, and (2) there is a sufficient factual basis for the expert’s opinion. The second requirement sinks Saxon’s evidence.
Essentially, what the expert did was to determine that some human must have caused the fire, and then speculated as to who it was based on conjecture. No one testified at trial that any Blue Ridge employee smoked inside the building, and indeed Saxon’s employees testified to the contrary without contradiction. Stripped of the expert’s testimony, Saxon’s case included no evidence that Blue Ridge breached any duty it owed to Saxon.
This case points out the precarious balance involved in the use of experts, particularly as to causation issues. Today’s opinion, while it involves a fire claim, has application to a wide range of civil cases, specifically including accident reconstruction testimony. It bears careful study for that reason alone.