[Posted June 9, 2011] Since the Supreme Court shortened its June session to four days, today is opinion day. We get sixteen published opinions and three cases decided by order. Two of the most anticipated decisions for today don’t arrive at all; the actual-innocence appeal of Dustin Turner is held over the long summer and will be decided in the September session. The same fate awaits The AES Corp. v. Steadfast Insurance, which was set to be the first appellate opinion in the nation to determine whether a commercial general liability insurer had to pay for claims allegedly springing from global warming.

It’s worth noting that harmony reigns on Ninth Street; there are no dissents among this batch of cases, as all of today’s decisions are unanimous.

Criminal law
We get another expungement decision today – Eastlack v. Commonwealth tests whether a person who has been found not guilty by reason of insanity may have his criminal records expunged. At first blush (or at least after a first read of the statutes), you’d think so; after all, the statutes relating to insanity findings refer to a person being “acquitted” for that reason. They even describe the defendant in that situation as an “acquittee,” a word I had probably never seen in print before today. (Indeed, it just caused the spell-check function on my computer to choke.)

But the Supreme Court finds today that being this kind of acquittee doesn’t enable you to obtain expungement. After all, one of the results of such a finding in a criminal case is a mandatory referral for psychiatric evaluation and treatment if appropriate, plus court monitoring. If someone who has been “acquitted” in this way were to immediately obtain an expungement order, he could wipe out all of the records of his evaluation and treatment. This, the court finds, is one of those “absurd results” that statutory construction forbids.

In raising my ever-so-slightly spoiled daughter, I’ve been careful to teach her to be very wary of labels, which can be quite deceptive. For those courtwatchers who have slapped the labels of conservative and liberal on the Court of Appeals and the Supreme Court, this session’s Exhibit A is Commonwealth v. McNeal.

At trial, McNeal got the benefit of a somewhat forgetful store clerk. He was charged with renting equipment for a week and not returning it on time. The law gives you ten days after the expiration of the rental period to return goods before it deems the failure a theft. McNeal went to an equipment-rental store and rented a piece of equipment worth about $2,500. When he didn’t return it within the promised period of one week, the store tried without success to reach him. After a “couple of months,” it contacted the sheriff’s department, which recovered the equipment from McNeal’s sister’s house.

From the prosecution’s standpoint, trouble arose innocently enough. The store manager testified that he rented the equipment on September 18, 2008. In order to save the deputy a trip to the courthouse, the parties stipulated that he would testify that he recovered the equipment on September 19, 2008. Those dates are placed right together in this paragraph, so you can see the problem quite readily: they’re one day apart. But the two dates were probably mentioned quite some time apart during the trial, and no one noticed the problem.

Well, at least one person did notice. McNeal’s lawyer moved, at the close of the prosecution’s evidence, to strike, since the evidence showed that the equipment was recovered well within the one-week rental period. The judge checked his notes and found that the lawyer was right; the store manager had obviously gotten her dates mixed up. But she had clearly testified that she tried for a period of months to contact McNeal. The court accordingly discounted her testimony of the specific date, and convicted McNeal.

A panel of the Court of Appeals reversed in an unpublished order, holding that the trial court was not free to “arbitrarily adopt [the] inculpatory interpretation of the evidence.” Since the prosecution’s own evidence showed that one required element of the offense did not occur, the conviction was reversed. This time, the Commonwealth appealed.

Today, the justices reverse the trial court and reinstate the conviction. A trier of fact is free to make judgments about which witness should be believed over another. But it can also decide which portions of a given witness’s testimony to discard and which portions should be accepted. By effectively insisting that the trial court must adopt the exculpatory portion of the evidence, the Supreme Court holds, the CAV had improperly usurped the factfinder’s role. The court thus reverses and enters a final judgment of conviction.

Back to my reference to labels: This is the second session in a row in which the justices have reversed a CAV judgment in favor of a criminal appellant. Those who pay only casual attention to the two appellate courts may regard that the Supreme Court is uniformly more liberal, at least when it comes to criminal appeals, than is the Court of Appeals. For those people, this opinion (and last session’s ruling in Commonwealth v. Smith) must have a man-bites-dog quality. The reality is that the Supreme Court, philosophically, comprises primarily judicial moderates, something that appellants and appellees alike should keep in mind.

I covered Kelso v. Commonwealth when it was decided by the Court of Appeals last August; here’s a link to my earlier analysis. Today, the Supreme Court affirms the decision of the CAV, ruling that a charge of causing a juvenile to assist in drug distribution could be tried in Hanover County when the contact between the defendant and the juvenile occurred in Henrico. Unlike drug distribution, an offense that’s complete immediately upon delivery, this offense requires several things to happen, and those things can happen in different places. The court finds that in this kind of circumstance, venue is proper where any of those events occurred, so the conviction is affirmed.

The Fourth Amendment requires that the police have a warrant, or else exigent circumstances, before they can search your home. But like many other constitutional rights, that right can be waived. The issue in Brooks v. Commonwealth is the scope of the defendant’s consent, allowing the police to search his home.

The gendarmes arrived at Brooks’s house in Petersburg after receiving word of shots being fired. They searched the yard, the house, and even a couple of cars (all with the owners’ consent) but found no weapon. For some reason, an officer asked again for permission to search the house, and again, Brooks said, “Okay.”

During the search, an officer came across a folded gift bag that, as he lifted it, had some heft to it. He looked inside and found not a weapon, but a wad of currency and some cocaine. He asked Brooks if the stuff belonged to him, and brooks helpfully said yes.

I have in the past offered some tongue-in-cheek advice to the legions of potential criminal defendants who no doubt read this website faithfully; that advice runs, “You have the right to remain silent; use it!” Brooks, alas, must have confined his web browsing to lesser appellate sites, so he didn’t get the memo. It does lead one to wonder why someone who knows that there’s cocaine in the house would willingly give his consent for a police search; but it’s not for us to read Brooks’s mind.

The Supreme Court today rules that Brooks’s consent is enough to uphold this conviction. To be sure, the officers didn’t have carte blanche to search everywhere; just places that would possibly hold a weapon. But a bag is just such a place, so the Court of Appeals correctly ruled that the seizure of the weapon was permissible. Brooks also raised what I have to regard as a half-hearted Miranda assignment based on the single question put to him. But as the court swiftly rules, it’s clear that this was not a custodial interrogation, so that fails, too.

The court decides one criminal appeal today by published order. I discussed Rix v. Commonwealth last year, when a panel of the Court of Appeals affirmed the conviction of a helpful passenger who, when the car was pulled over by an officer, volunteered to surreptitiously switch seats with the driver, who was unlicensed. Alas, the officer wasn’t utterly stupid, and he was onto the ruse in no time. This sort of kind consideration bought the erstwhile passenger a charge of DUI, since she was, in the judgment of the trial court, under the influence at the time of her mitzvah. [The author of this website recognizes well the distinction between this foolish act and a true mitzvah, and asks his readers for the indulgence of a small dollop of literary license.]

The Supreme Court today affirms the conviction, since the unfortunate Ms. Rix chose to place herself in the driver’s seat of a vehicle with the engine running. The court cites its decision earlier this year in Nelson v. Commonwealth, where a defendant was found slumped over behind the wheel while the engine was off but the radio was on; that was enough to establish that Nelson was operating the car.

In my humble opinion, Nelson was wrongly decided, but Rix isn’t. Nelson is, as far as I know, the first decision in the history of our fair Commonwealth in which the defendant was convicted of operating a car in which the engine was turned off. Rix, in contrast, got behind the wheel of a vehicle with the engine running; all she had to do was put the car in gear, and she’s all set to endanger the whole community.

Eminent domain
What’s a fixture? We lawyers all studied that at one point or another back in law school, when we learned the difference between real property and personal property. Real property is land, while personalty is, well, stuff. But personalty can become part of realty when it’s a fixture, and is actually or constructively annexed to the land where it’s located. The question of what determines if a given item is a fixture or not is at the heart of Taco Bell of America v. CTC.

Taco Bell operated a fast-food restaurant in Fairfax County, but the restaurant was in the way of a road expansion. VDOT took the portion of the site that included the restaurant building. When the owner shut down the restaurant and handed over the keys, VDOT was no doubt surprised to find several items of equipment left in place. Much of it was large equipment, such as freezers, ovens, and food-assembly workstations. But some of it was smaller – pans, fry baskets, even waste baskets. Taco Bell explained that, as a matter of corporate policy, it only brought new equipment into its restaurants, so the used stuff left there was of no use to it.

The issue in this case was whether VDOT, in taking the site, had to accept (and pay for) items that Taco Bell could have removed from the site and reused (or even sold). At trial, once the evidence was in and the judge saw that the items could all have been removed without damaging them or the building, the court struck the owner’s claim that the jury should consider the value of the fixtures in fixing just compensation. Over the owner’s objection, the court instructed the jury to disregard that component of the claim.

Taco Bell appealed, and today the court reaffirms its commitment to a three-part test to determine whether personal property has become a fixture or not. The three parts are:

1. Whether the items have been actually or constructively annexed to the site;
2. Whether the items are appropriate to the purpose for which the land is being used; and
3. Whether the owner intended to make them part of the property.

The Supreme Court today rules that the trial court erred in removing this issue from the jury by applying a single-part test (Can the stuff be moved?). The question of whether these items were fixtures or not was for the jury, since the owner adduced some evidence on each of the three elements noted above. The case is thus remanded for a new trial.

But wait; there’s more. This case offers one other useful lesson, one that has application beyond the field of eminent domain. On appeal, the Transportation Commissioner argued that if the court reversed, the case should be remanded only for a trial on the value of the fixtures. The justices reject this argument in a footnote at the very bottom of the opinion, observing that in condemnation cases, as in other litigation, an award is unitary. You can’t ask a jury to fix compensation item-by-item, any more than you could ask a tort jury to allow the plaintiff $X for an arm injury and $Y for a leg injury. That means that the entire condemnation case will have to be retried – a significant victory, at least in this case, for the landowner.

This one could just as easily have been placed under the heading of bankruptcy law; but in the end, the decision comes down to an issue of Virginia procedural law. Kocher v. Campbell presents the question of who has standing to bring a tort action when the plaintiff files a bankruptcy petition.

We don’t know much about the crash, except that it happened in 2004 in Spotsylvania County. The injuree sued the injurer within the two-year statute, but before that happened, the injuree had gone into bankruptcy court. The plaintiff didn’t list the PI claim in his schedules, and no mention of it was made in the Chapter 7 bankruptcy case, which was administered in pain-vanilla fashion, eventually resulting in a discharge in 2006.

Meanwhile, back in state court, the plaintiff had nonsuited his original claim and filed a second, all without any involvement by the bankruptcy trustee. The defendant moved for summary judgment, alleging that the plaintiff lacked standing to sue since the trustee controlled the assets of the estate. It looked like the court was about to grant that motion, but the parties apparently reached an agreement to allow the plaintiff a second nonsuit in early 2008.

At that point, evidently acting pursuant to the agreement, the plaintiff/debtor moved to reopen the bankruptcy case to list the PI claim as an exempted asset. While that matter was pending, plaintiff filed Suit #3 in May 2008, but waited to serve it while the bankruptcy motion played out. Finally, in May 2009, the bankruptcy court ruled that the plaintiff had properly exempted his PI claim.

At last! We can go to state court without further federal complications. But the defendant, who had been very patient throughout this whole process, moved for summary judgment, again alleging lack of standing, plus now the statute of limitations. The trial court denied that motion, but entered a rare order certifying an interlocutory appeal; the Supreme Court agreed to take the case.

Today, the Supreme Court rules that the plaintiff did not have standing at the time he filed any of his three actions. We start with the inescapable premise that the right of action is an asset of the estate, and the only person who can file suit (once you file bankruptcy) is the trustee. That remains true until the trustee abandons the property, or until the bankruptcy court rules that the claim has been properly exempted. The trustee never abandoned the claim, and the federal court didn’t order that the claim was exempted until 2008, well after the third suit had been filed. That means that the plaintiff didn’t have the right to fie any of the suits.

The thing to remember here is that neither an abandonment nor an exemption order acts retroactively. And since a suit filed by someone without authority to sue is a nullity, that means that no valid suit was filed within the period of the statute of limitations. The plaintiff, by virtue of filing bankruptcy, wound up effectively waiving his tort claim.

What could the plaintiff have done differently? For starters, he could have listed his PI claim in his schedules of assets from the start. That would have alerted the trustee to its existence, and given that trustee an opportunity to file a timely suit, or else abandon the claim in time for the plaintiff/debtor to file suit directly.

This appeal presents the opposite situation from what you’d normally conceive (where a defendant files bankruptcy). It’s readily foreseeable that a plaintiff might find herself in a tough financial spot after a crash, especially where the collision causes significant medical bills and a loss of time at work. This case is a harsh reminder that tort lawyers have to be careful about pressing their claims and cooperating with bankruptcy lawyers, where that situation causes a plaintiff to seek the succor of Chapter 7.

Claims of tortious interference with contract are particularly difficult for plaintiffs where the underlying contract is terminable at will. We see one today involving two contracts, each terminable at will (more or less). The case is Lewis-Gale Medical Center v. Alldredge, and involves a suit by an emergency-room physician against the hospital where she worked.

The doctor actually worked for a group of ER doctors; that group, in turn, staffed the hospital’s emergency ward. One night, the doctor found herself at an informal dinner, surrounded by nurses (all employed by the hospital) who had some sort of employment grievance. They talked about writing to the hospital’s administration. Some time later, one of the nurses showed such a letter to the doctor, but the doctor declined to sign it, since it was a nursing issue, and also because she knew that her group of doctors didn’t want anyone meddling in the hospital’s internal employment issues.

There’s a perfectly good reason for that concern: The ER group had a contract with the hospital that was terminable without cause, requiring only a short notice period. The doctors didn’t want to do anything that would jeopardize that contract.

Unfortunately for the doctor, a nursing administrator got wind that the doctor had participated at the dinner, and decided to do something about it. Before long, hospital administrators were convening meetings to decide what should be done with her; one such administrator described the doctor as an “organizational terrorist.” The hospital never came right out and said that if the doctors’ group didn’t terminate the doctor, the hospital would terminate the group; but the lawsuit contended that such a threat was implicit.

Needless to say, the doctor soon got a notice from her direct employer, exercising its right to terminate her employment 90 days thence. She sued the hospital, claiming that it used improper methods to interfere with her contract relationship with the group. At trial, the jury saw things the doctor’s way, awarding her $900,000 in compensatory damages.

The dispositive issue on appeal is whether the hospital used improper means to interfere with the doctor’s employment contract. The Supreme Court notes that even an explicit threaten to do something that you have a legal right to do isn’t “improper” in this context. Without specifically reaching the issue of whether the hospital indirectly threatened to discharge the ER doctors’ group, the court rules that nothing the hospital did was legally improper. That means that the trial court erred in submitting this case to the jury, so the judgment is reversed.

The court has now handed down several tortious-interference cases in the last few years, including the Dunn, McCormack & MacPherson case earlier this year. These decisions provide plenty of new guidance on how these cases are to be handled in the trial courts.

Civil procedure
The court cracks open a fascinating conundrum today, in Davis v. Fairfax County. It started with a 2007 petition by the county to declare Davis unfit to own pets. By statute, petitions like that have to be filed in general district court; that court agreed with the county. Davis appealed. In the circuit court, something must have gone wrong for the county, to the point that it elected to nonsuit. The nonsuit order required the county to give Davis back her animals (which had been impounded) unless it had refiled an action by close of business on a given day. The county beat the deadline by filing a new petition, back in GDC, on the deadline day.

Here’s the conundrum: The nonsuit statute requires that a new action cannot be filed “in any court other than that in which the nonsuit was taken, unless that court is without jurisdiction . . . .” That indicates that the new petition should have been filed in circuit court, and the county screwed up. But wait; the animal-control statute says that petitions must be filed in general district. That, in contrast, indicates that the county filed in the right court.

Which court is the right one? The outcome of this case hinges on the answer to that question, because when the refiled suit came to be heard, the GDC judge decided that he had no jurisdiction, so he dismissed the case. The county appealed that, and that action really should end the dispute, since, by one means or another, we’re in the court that has jurisdiction now.

Unfortunately, it doesn’t work that way for the county. The Supreme Court rules today that the only court in which the nonsuited action could be refiled is the circuit court. The county argued that circuit didn’t have jurisdiction to take an original action in this kind of litigation, and that contention looks awfully plausible. But the justices decide today that the trial court didn’t lose all jurisdiction over the case when the nonsuit order came down; it still had appellate jurisdiction. The fact that the case got to circuit by a (ahem) circuitous route doesn’t help, either, because when the higher court’s jurisdiction is derivative of the lower court’s, the higher court can’t manufacture jurisdiction by accepting an appeal. The result of this plate of legal spaghetti is that the petition against Davis is dismissed, and she gets her animals back.

There’s one point of particular procedural irony here. Davis had a similar nightmare when she brought this appeal: Do I appeal to the Supreme Court or to the Court of Appeals? In truth, she really wasn’t at risk; there’s a saving statute that allows transfer to the right appellate court when an appellant proceeds timely in the wrong one. But Davis was taking no chances at repeating what she thought was the county’s mistake; she appealed to both courts simultaneously. (The Supreme Court determined that the case belonged in the CAV in the first instance, so it transferred its appeal downstairs.)

If you liked that conundrum, I’ll give you another one: Rutter v. Oakwood Living Centers of Virginia involves the finality doctrine and the discontinuance statute. It’s a wrongful death suit brought back in 2000 against an employee of a company providing physical-therapy services at an assisted-living facility. The plaintiff also sued the employee’s company, the company’s president, and the owner of the facility itself.

Two months after the case was filed, the employer and its president both filed bankruptcy. That resulted in an order staying the proceedings in circuit court. The order provided that the case would be discontinued if there were no proceedings for three years, pursuant to Code §8.01-335. In truth, it languished much longer than that. The plaintiff made a passing attempt to get some discovery responses out of the non-bankrupt defendants, and once moved the court to set a trial date, but nothing ever developed out of that. Finally, in 2009, the facility filed a special plea of the statute of limitations, claiming that the case had been discontinued in 2003, with no subsequent proceedings to bring it back to life.

The trial court agreed, and entered an order dismissing the case, as to the facility only, late in 2009. The plaintiff appealed, and the Supreme Court granted a writ.

This conundrum is thinly veiled, but I’ll go ahead and set it out here: As any third-grade appellate lawyer could tell you, the order appealed from obviously isn’t final. It only adjudicates claims against one defendant, leaving three others untouched. Nowadays, a court could enter a partial final judgment order (so entitled), and enable the plaintiff to appeal that; but that provision wasn’t inserted into the rulebook until months after the 2009 order was entered. Merely dismissing the appeal as nonfinal would leave the great questions of this case unanswered: Was the 2000 stay order a final order? Did it quietly morph into a final order with the passage of three years?

The court decides that this case is too important to leave dangling, so it addresses the merits of the issue, giving bench and bar some valuable guidance in the process. The justices find that a discontinuance order cannot operate prospectively, as this one purported to do. The statute speaks in retrospective terms: “there has been no order or proceeding” for three years, etc. A judge can’t conduct that retrospective review if he acts prospectively. In addition, the statute clearly contemplates some act by the Clerk to discontinue the case, with notice give to the parties; that never happened here.

Today’s opinion distinguishes some legitimate prospectively operating orders, such as those sustaining a demurrer and giving a plaintiff leave to amend within X days. In many such situations, the order provides that if no amendment is filed within the time allotted, then the demurrer order shall be the final order in the case. The Supreme Court notes that the cases addressing orders like this aren’t interpreting statutes; and there is no uncertainty in time, as there would be with a discontinuance that’s effective at some point in the future.

This is one instance in which I’m particularly glad that the court elected to let us know how it interprets the discontinuance statute instead of silently deferring the issue.

There’s also one unpublished order today involving a civil-procedure issue: Concord Condominiums v. Tandraprapran, like Davis v. Fairfax, started in general district court. Concord sued, and the defendant answered and counterclaimed. The GDC judge ruled for the defendant on both the original claim and her counterclaim, awarding her $7,000. But the judge marked the warrant incompletely, entering the ruling only on the principal claim. That left the defendant about $7,000 short of full justice.

The parties discovered this omission after Concord had noted and perfected the appeal. In order to permit the circuit court to adjudicate the entire case, the defendant moved the GDC to correct the record to provide for the ruling on the counterclaim. The parties presented a consent order providing for that correction, and the judge was happy to oblige them.

But in the circuit court, the defendant had a nasty surprise for Concord. Se moved the court to summarily affirm the GDC judgment, since Concord had endorsed the correction order as “Seen and Agreed.” Concord argued in vain that the only thing it was agreeing to was the correction; not the underlying rulings at trial. The circuit court granted judgment for the defendant on the same terms as before, evidently reasoning that you can’t appeal from a judgment to which you consent.

This case presents the question of, When is an appeal not an appeal? When it calls for a trial de novo; that’s when. The Supreme Court notes that a circuit court doesn’t sit as a reviewing court when a dissatisfied party appeals; it’s acting as though it were trying the case under its original jurisdiction. Accordingly, it doesn’t matter whether the appellant endorsed the GDC judgment order with “Seen and objected to,” “Seen and Agreed,” or the second stanza of “The Love Song of J. Alfred Prufrock”; trial is de novo.

In this case, the circuit court improperly dismissed Concord’s appeal because it waived no rights by its endorsement. This is a blanket procedural ruling, but frankly, I think that if the Supreme Court had addressed the waiver issue head-on, it would have reached the same result. From the record as described here, it’s clear that Concord wasn’t waiving its right to appeal the judgment against it; it was helping out its unfortunate opponent, and got punished in the trial court for doing that. I can’t envision that anything in that posture would survive appellate review before these justices.

Commercial law
Ah, the rare joy of a UCC case! No, wait; don’t leave for another appellate website just because I used the acronym UCC. Today’s opinion in Cappo Management V v. Britt is, as UCC cases go, fairly breezy; an easy read. Bear with me here. [Full disclosure: The author of this website is a former UCC jock in law school who now sees commercial law issues about as often as he sees World Series titles for his beloved Dodgers.]

Cappo Management operates a car dealership down here in Tidewater, and it sold Britt a car. She filled out the usual tons of paperwork attendant to such a purchase (having recently bought a car, I feel her pain in this labor). One of those documents provided that if her contracted financing fell through, the dealer could repossess the car. After trading in her car, plunking down $1,500, and completing the paperwork, she drove away in her new ride.

Two guesses what happened with the financing.

The dealer repossessed the car two months after the sale, and subsequently sold it. In doing so, it didn’t give Britt advance notice of the resale. This is where a lack of UCC knowledge can step up and bite you; the UCC requires a repossessing seller to give 10 days advance notice of its intent to resell a repossessed item. Britt sued, and first a general district court and then a circuit court awarded her $15,000 in damages.

On appeal, the dealer argues that it was not a secured creditor, because the sales agreement provided that the sale was conditional upon financing. When the financing didn’t come through, the contract was void, and it had an absolute right to get “its” property. It’s true that the contract says just that, in one place. But elsewhere in the small mountain of documents, it’s clear that the parties considered Britt to be the owner as soon as she turned the ignition key. She alone had the obligation to insure the car. She assumed “any and all responsibility for . . .the vehicle.” Most importantly, after paying good money for it, she got to drive it off the lot; this is the old “possession is nine points of the law” angle.

The Supreme Court today finds that, at a minimum, the contract documents, taken as a whole, create an ambiguity over who’s the owner during the time that the financing application is simmering. And since the dealer drafted the documents, any ambiguity is construed against it. That made it a secured creditor; that, in turn, required it to comply with the good ol’ UCC; and that, in turn, made it liable for failing to notify Britt in advance of the resale. Britt’s car is long gone, but she’ll have $15,000 plus interest for a new down payment – presumably at another dealership.

Insurance law
A complicated fact pattern underlies Dabney v. Augusta Mutual Insurance. Since we strive for brevity (which begets readability) here at VANA, I’ll truncate the eight-page factual recitation and get right to the rulings.

On the surface, this case is about the insured’s duty to timely notify the insurer about a pending claim, and about the insurer’s reciprocal duty to promptly notify the insured if it intends to rely on a policy defense. When the insured got sued on a dog-attack claim, she eventually got around to notifying her homeowner’s insurer. But that notice came eight months after the suit papers were filed. I a declaratory-judgment action to determine if coverage existed, a jury found in favor of the insurance company, ruling that the notice was not seasonably delivered.

Today, the Supreme Court reverses in part, holding that the trial court impermissibly ruled as a matter of law that the question of whether the notice was delivered “as soon as practicable” should have been fed to the jury instead of being scooped up by the judge. There were plenty of mitigating circumstances here – the defendant was a personal rep of a decedent, and didn’t know about the existence of the policy for a while; the insurance company had moved without notifying the policyholder – and the court should not have ruled this way as a matter of law.

I mentioned above that the case was, on the surface, about the parties’ duties. The subtexts, which you need to know about, are more important. Subtext #1 is that the policyholder loses on one issue today because of the way the pleadings are crafted. In the trial court, she wanted to argue that the insurance company got notice either when a lawyer sent it a courtesy copy of the suit in 2004, or at the latest in 2005 when it set up a file. Either of those dates, the policyholder argued, were enough.

But the trial court ruled that only the 2004 date was in play at trial, because that’s all the plaintiff pleaded in the DJ action. There was no mention of the 2005 date in the complaint. Fundamentally, you can’t get relief on a theory of the case that you haven’t pleaded, and that hamstrung the plaintiff.

The second subtext is one that I’ve been shouting from the cyber-rooftops for years now. This Supreme Court is firmly committed to jury resolution of disputed issues of fact. Any trial judge who enjoys appellate scrutiny of his decisions need only take an issue away from the jury, and he’ll get plenty of attention from the direction of Richmond.

I’ve actually been in the building that’s the subject of Riverside Owner, LLC v. City of Richmond. So has anyone who’s visited Troutman Sanders’s downtown Richmond office, on Brown’s Island, or dined at Blackfinn Restaurant. It’s an old abandoned power plant that was renovated and turned into parking, office space, and retail. I was glad to have the chance to read this opinion (even if it is a tax case) to learn something of the history of the place.

This appeal is about a rehabilitation tax break for the owner and chief tenant (that would be the folks at Troutman), based on the rehabilitation of the property. Before the developer took it over, the building on the site was valued at – get this – $500. Some nifty construction later, the building sold for $85 million.

The city has a program that provides incentives, in the form of tax exemptions, for properties like this one. Richmond has traditionally used something called “the Chandler policy,” named for its creator, a former city assessor, to calculate those tax breaks. The application of that policy led to a difference of $18.6 million in the tax value, and that led to this litigation.

Here’s the source of the difference: The City Code (tracking the state statutes enabling this kind of exemption) exempts part of the value of the rehabilitated building. That exemption is calculated by taking the “initial rehabilitated assessed value” and its value before the rehab work. The first year after the work was completed, the building was assessed by the city at just under $64 million. That, you will appreciate, is a whopping difference. But the Chandler policy wasn’t as generous. It caused the assessor to backdate the larger number to the date of the rehab-exemption application, which was three years earlier. That generated a base number of about $45 million.

I’ll cut to the chase here: The Supreme Court rules that while Mr. Chandler was no doubt well-intentioned (he wanted to back out all appreciation due to market factors, and focus exclusively on the change in value created by the rehabilitation), his policy didn’t follow either city or state law. In effect, the policy purported to erase the word rehabilitated from the calculus, and assess the value of the building even before the work was completed. That means the owner and the tenant get the relief they wanted.

Well, most of it, anyway. In a separate issue raised as cross-error, the taxpayers sought an award of their attorney’s fees, since the rehab agreement called for that n the event of litigation. But their pleadings didn’t state that they were suing based on the agreement; they specifically stated that they were suing based on state law (authorizing correction of erroneous real-estate assessments). Each side, accordingly, bears its own attorney’s fees, which I infer were prodigious.

I know my limitations. A few paragraphs above, I did what I could to make a UCC case interesting to read about. After all, I have no desire to inflict tedium upon my loyal readers. This is fair warning that I’m probably in over my head on this one; making Level 3 Communications v. SCC sing is probably going to be a tougher task than I can handle. For those of you who are regulatory or taxation jocks, read on. For those of you with limited attention spans in this field, I’ll try to make the next section sparkle, to make up for this one.

This one’s a case of right message; wrong medium. Level 3 got taxed in Virginia based on its gross receipts, some of which were attributed to Internet-related revenues. There’s a federal law that requires states to refrain from taxing certain Internet-related income, presumably to encourage e-commerce.

The SCC is charged to certify the amount of revenue a company collects. That certification is then handed to the Department of Taxation, which taxes the companies based on that revenue. Level 3 felt that the SCC had certified its income at too high a level, since it included certain e-commerce revenues. It therefore applied to the SCC to correct the certifications.

The SCC responded that it “did not have the authority to exclude such revenues from Level 3’s certified gross receipts.” Essentially, it argued that its duty was just to fix the amount of money that Level 3 actually received; what the Taxation guys did with that information was up to them.

Let me interject an aside here: I learned some time ago that the SCC is that rare creature that exercises all three types of governmental powers. It legislates (promulgating regulations and setting utility rates), executes (as relevant here, acting as a litigant) and judges. In this capacity, the SCC is equal in dignity to a circuit court. The part that will cause some people, especially nonlawyers who aren’t used to seeing such things, to scratch their heads is that the SCC can adjudicate disputes in which it’s one of the litigants.

My best guess is that the Commission has a high winning percentage in those cases; but that would be both cynical and a complete guess. Nevertheless, that’s the situation here; the SCC ruled in favor of itself and held that it had no authority to grant Level 3 the relief it requested.

Today, the Supreme Court agrees. The SCC doesn’t assess taxes, so it isn’t subject to a federal law that limits the income on which taxes can be assessed. In effect, the court tells Level 3 that it can take its beef to the Department of Taxation; but the SCC is just a messenger.

There are a couple of rulings that look awfully like first-impression matters in Bennett v. Sage Payment Solutions. When the opinion starts a sentence with, “We hold that . . .” it’s time to pay careful attention.

I had never heard of Sage before today, but it must have been a really, really lucrative business, because it hired Bennett as its president and agreed to start him at $360,000 a year. The contract included provisions for severance pay, and a covenant not to compete. Just four months later, Bennett zapped an e-mail to the company that advised of his desire for a slight raise, to “the $1 million range.” The note also said, in pertinent part,

[W]hile I would enjoy recommitting to Sage, the inequity between my current compensation and what I think my value is on the outside is substantial. With that in mind, I am suggesting that either my compensation be altered to something more in line with my value, albeit discounted, or we agree to my transition out of the company.

He added that if his demands were too high for the company’s appetite, he hoped that

we can work out a mutually agreeable transition plan. Perhaps the best approach would be to have me stay on in my current position or as a consultant while you are searching for or selecting a replacement from within. In either event, I will want the clock running on any post termination restrictions listed in my employment agreement.

Well, now. This must be some president. Less than four months later, he was gone.

He sued, of course; otherwise we’d never have heard of these folks. The trial court allowed the jury to decide whether the president had repudiated the contract or not. The president objected to that approach, claiming that you can’t repudiate a contract after it’s already partly performed. He also urged that nothing in his e-mail was an unqualified repudiation; indeed, he continued to work for the company for months after sending the note.

The jury, as juries are wont to do, decided it didn’t like the way the president had handled matters (no doubt there were few seven-figure employees in the venire), so they ruled in favor of the company. The president went out and got himself a writ.

The court begins by handing down two We-hold-that rulings, the ones I’ve told you to pay close attention to. After agreeing with a Fourth Circuit decision that repudiation is a defense to a breach-of-contract claim, the court holds “that repudiation may also apply to a contract that has been partially performed, when future obligations under the contract are repudiated.” That’s black-letter lesson #1. It goes on to hold “that a party’s renunciation or abandonment of his or her contractual duties, after performance has commenced under a contract requiring continuous performance, constitutes a repudiation, which may be treated by the party to whom the duty is owed as an anticipatory breach of the contract.”

This, in my mind, is at least a kissin’-cousin of the Virginia doctrine of first breach (the party who first breaches a contract can’t sue to enforce it). In that sense, I’m not certain that it breaks as much new ground as it first appears. But there’s that We-hold-that language in there, so it deserves my mention and your attention.

From there, the court goes on to decide the only close question in the case, whether the somewhat-ambivalent language in the e-mail actually constitutes a repudiation. Keep in mind that a repudiation of a contract “must be clear, absolute, unequivocal, and must cover the entire performance of the contract” if it’s to constitute a defense to this suit. The president has a point here; his note, while it contained some fairly stiff demands, actually only consists of an invitation to negotiate.

Despite that careful language, the Supreme Court holds today that the jury properly could conclude that the e-mail was an unequivocal anticipatory repudiation. It notes that if it were not, the company couldn’t start to look for a new executive until the day that the president’s chair sat empty.

This explanation by the court seems a little thin for my taste. I agree that the company should win this appeal (as it does; the judgment in favor of the company is affirmed). But what the president wrote, volcanic as the language was, still seems to be couched in terms that allowed for further negotiation. This doesn’t quite look like the absolute and unequivocal language that I’d want to show a repudiation, and when the president kept coming to work, it’s hard to say categorically that he was hanging the company out to dry.