ANALYSIS OF MAY 10, 2018 SUPREME COURT OPINIONS
(Posted May 10, 2018) The Supreme Court issues two published opinions today in appeals argued in the February session. Justice Kelsey writes both of these, and they’re both unanimous.
Condemnation lawyers are well-acquainted with the formula for determining damages to a residue parcel: You subtract the residue’s value after the take from its value before the take. Any difference is damage that’s owed to the landowner. Today, in Commissioner of Highways v. Karverly, Inc., we get an important refinement of that calculus.
The landowner operates a day-care center on five acres in eastern Henrico County, on Route 5. VDOT decided to expand the right-of-way, and took a strip of land plus a couple of easements from the site.
At the just-compensation trial, the landowner sought damages. It called an appraiser who testified that the take generated certain functional obsolescence on the site, requiring adjustments including relocation of fencing and equipment. Considering the residue’s value before and after the take, the expert testified to damages of about $190,000.
VDOT’s appraiser testified about the value of the take itself – a matter not in issue in this appeal – but when he tried to move on to the subject of damages, the landowner objected. VDOT’s appraiser had not valued the residue before and after the take; he simply concluded that based on his view of the property, including factors such as its permissible uses, there was no change in value. The trial court sustained the objection and excluded the damages opinion.
The condemnation jury returned a divided report (that’s permissible in condemnation trials). Three members awarded the landowner damages of roughly $168,000; the other two reported that they “felt that the value of the remainder after take was not correct, which prevented us from agreeing to the damages.” The circuit court entered judgment on the majority report; VDOT got a writ.
The justices today reverse and remand the case for retrial – presumably though not expressly on the issue of damages alone, since VDOT didn’t appeal the award for the take itself. The court finds that the exclusion of the VDOT appraiser’s testimony was an abuse of the trial court’s discretion.
The primary ruling today is that an appraiser need not calculate the before and after values before testifying that there are no damages. (This rule obviously benefits condemnors only, not landowners.) The justices rule that the VDOT expert did enough investigation to conclude that there was no adverse effect on the property, so it was unnecessary to perform the calculations.
There’s a clear subtext in today’s opinion that the Supreme Court was not comfortable with the testimony by the landowner’s expert. Justice Kelsey repeatedly writes critically of that expert’s methods and conclusions. This is noteworthy because in the appeal, VDOT didn’t assign error to the foundation for the landowner’s expert’s opinions; it only appealed the exclusion of its own expert. There’s also an unusual emphasis on the split nature of the jury’s report, something I haven’t seen before in these decisions. In the end, the court decides that these factors militate in favor of admission of VDOT’s expert’s testimony.
While most lawyers are aware of the Statute of Frauds, Code §11-2, most don’t know that it has a cousin, the Statute of Conveyances, Code §55-2. The latter statute requires that a lease for a term of more than five years must be by deed or will. The justices explore the Statute of Conveyances this morning in The Game Place, LLC v. Fredericksburg 35, LLC.
This appeal is about a commercial lease for a store in the shopping megalopolis known as Central Park in Fredericksburg, just west of I-95 at Exit 130. Both the landlord and tenant are successors to the original parties to a 15-year lease. The Game Place operated a store – presumably selling video and computer games – and paid monthly rent to the landlord, Fredericksburg 35, for 13½ years. At that point, probably facing declining sales due to the rapid rise of online gaming, the tenant decided to close up shop. It handed the landlord the keys and a check for the current month’s rent, and said farewell.
The landlord sued the tenant and its guarantor for the remaining rent over the term of the lease – about $68,000 – plus 25% attorney’s fees. The tenant asserted our new friend the Statute of Conveyances as a defense, claiming that the landlord based its suit on a plain-vanilla lease, not in the form of a deed. The trial court rejected that argument, holding that “The law looks at substance not form,” and ruled in favor of the landlord. The tenant and the guarantor got a writ.
Today’s opinion is yet another stroll through centuries of legal history, courtesy of Justice Kelsey’s enduring love of that topic. (I’m not complaining; I like it, too. I’m a history geek in addition to being a word nerd.) That history leads the court to the conclusion that the Statute of Conveyances is not merely an obsolete relic; it’s still a part of Virginia law and still governs leases such as this one. Since this lease wasn’t in the form of a deed, wasn’t executed under seal, and didn’t meet any of the requirements for a seal-substitute under Code §11-3, it’s unenforceable as to its term.
Note the emphasis in that last sentence. All of the other provisions in the lease are binding on the parties; but the courts must treat this lease as unenforceable for its provision of a 15-year lease period. Instead, the term is governed by the usual rhythm of rent payments. In this case, the tenant had paid rent monthly, so it is, in effect, a month-to-month lease. Since the tenant was current on rent when it surrendered possession, it owes the landlord nothing. And since the guarantor’s liability is contingent upon the tenant’s, he gets off, too. The Supreme Court reverses and enters final judgment.
One last point about today’s decisions: If you like footnotes, you’re going to have a blast reading these. There are 20 footnotes in Karverly and 24 in The Game Place, while the two opinions add up to just over 33 pages. (You can probably gloss over the notes in The Game Place unless you really like the history lesson, but the notes in Karverly are important to understanding the ruling.) I haven’t performed a statistical analysis, but my general sense is that Justices McClanahan, Powell, and Kelsey tend to use far more footnotes than do their brethren on the court.
But wait! There’s more …
In an unpublished order – probably unpublished because the circumstances are so bizarre – the justices modify an assault-and-battery judgment from Hampton. The case is Mack v. Blount, brought by a man who sustained “a small scratch” on his hand when Mack struck him. Mack was evidently offended that Blount was walking his dog and encroached upon her property.
Normally in disputes like this, I’m on the side of the dog person. I regard cat ownership as an affliction that probably indicates an unstable mind. But I don’t know the circumstances here — conceivably, Blount might have declined to scoop up his dog’s deposit in Mack’s yard, or something like that — so I won’t judge too harshly.
Blount sued for $200K in compensatory damages and the statutory max for punitives. A jury saw his claim as more modest: In a question sent back to the court, it asked, “Can we place legal fees as the $ amount for compensatory damages or does it have to be an exact dollar amount?” This is a bad sign for the plaintiff.
The problem with this is that, while Blount had sought fees in his pleadings, he hadn’t adduced any evidence of them at trial. Under Lee v. Mulford from 2005, that means it’s too late. But instead of answering “No,” the judge just told the jury to reread the instructions and return a verdict.
What came next won’t be a surprise: The jury fixed damages for battery as “legal fees not to be [sic] exceed $35,000 plus $1.00.” (There was also an award of $1 for the assault claim and punitives of $1.) That led Mack to ask the court to instruct the jurors that they cannot award legal fees. The judge declined to do that. Instead, the court gave the jury a fresh verdict form and told it to go back and insert a numeral in the blank for damages. The jury did so, awarding the plaintiff $35,001 for battery.
You know what’s going on here, right? The jury figures that Mack shouldn’t have slugged Blount, and should have to pay his lawyer. But the jurors assessed one scratch as being worth one buck.
The court entered judgment for the $35K+3 – don’t forget that punitive award – but today the justices rule that the trial judge should have instructed the jury that no legal fees could be awarded in the case.
Normally, that would result in a remand for a new trial. But we’re not done with the strange developments here. Asked at oral argument whether Blount would prefer a new trial or a reduction of the damages to $3, Blount’s lawyer said, “We’ll take the $3, thank you,” or words to that effect. The lawyer explained that that would at least represent a victory, even if it would only be symbolic. Since that’s the relief that Mack wanted, too, the justices shrug and say, “Good enough for us, too.” The court reduces the award to $3, enters final judgment, and remands for an award of costs.
Who said that appellate litigation is mundane?