ANALYSIS OF OCTOBER 13, 2022 SUPREME COURT OPINIONS
(Posted October 13, 2022) Just four weeks after the September session, the Supreme Court of Virginia hands down rulings in nearly half of the appeals argued that week. I’ll confirm what you’re thinking: That’s fast work, measured by the court’s historical pace.
I could just as easily have classified Taylor v. Aids-Hilfe Koln E.V. as a foreign-judgments appeal. A man we’ll call Uncle James, who has dual German-US citizenship, makes a will in 2000 that leaves everything to Aids-Hilfe, a German charity. (My rudimentary recollection of the German language tells me that hilfe means help in that language, while Koln is the German spelling of the city we call Cologne, where Uncle James lived.) He also held a brokerage account here in the Commonwealth.
In 2018, Uncle James signed a TOD designation for his account, indicating that the account should be transferred on his death to his nephew and the nephew’s wife. Uncle James died a little under two years later.
The German charity sued in German courts, claiming that it was the sole heir of all of Uncle James’s assets, including the brokerage account. It alleged that Uncle James was incompetent when he signed the TOD designation. That court awarded the charity something called a certificate of heirship.
The charity then sued in Virginia, seeking to domesticate the German judgment here. A circuit court overruled the nephew’s demurrer and eventually awarded summary judgment to the charity. The nephew got a writ.
Today generates a split result, as the Supreme Court affirms in part and reverses in part. But make no mistake: The nephew emerges as the real winner here. The Supreme Court today affirms the decision to admit the will to probate and to appoint an administrator c.t.a., but rules that the charity doesn’t have standing to challenge the TOD designation. Only the estate, acting through its personal representative, can do that. It also rules that the German court didn’t “grant or deny recovery of a sum of money,” so the Uniform Foreign-Country Money Judgments Recognition Act doesn’t apply. The justices accordingly reverse the TOD ruling and enter final judgment for the nephew.
That doesn’t necessarily end things, though; the newly appointed administrator could move to invalidate the TOD designation, and a trial court (including a jury, if requested) could pass on Uncle James’s capacity. We’ll have to await further proceedings to learn what happens there.
The Supreme Court interprets a new statute and provides a legal-writing milestone in Cornell v. Benedict, arising from my home town of Virginia Beach. It’s a suit for unpaid wages brought by counselors who worked for a group called Christian Psychotherapy Services. The group paid its clinicians every two weeks, based on moneys received for their work in a prior two-week billing period.
In 2020, the company found itself in financial distress. It hired an outside company as a “turnaround consultant”; I suppose that meant that they hoped that the outsiders would help them turn the business around and make it profitable. An employee of the consultant company served as president of Christian Psychotherapy’s newly established board of directors, and a long-time counselor acted as chair of the board.
As 2021 neared, dark clouds still overhung the company’s books. The board voted to cut costs by reducing its clinicians’ pay by 1%. The board chair communicated this to the employees, who probably grumbled a bit but didn’t overtly fuss.
As the ensuing pay period drew nigh, the company’s problems had worsened. The board voted to reduce pay by 30% and to pursue corporate bankruptcy. The board chair dutifully reported this to the clinicians and then promptly resigned, likely as a sign of solidarity with her co-workers.
The next day, the board reconvened to address its chair’s resignation. It collectively determined that the 30% reduction wasn’t workable, so it voted to fire every clinician, effective immediately. The president – the employee of the consultant hired to turn things around – carried out his instruction to notify the employees. That assuredly didn’t go over well.
Two days later, the president worked with Christian Psychotherapy’s staff to process final paychecks for the now-fired clinicians. Remember, they were paid in arrears for moneys brought in over a prior period, so the company emphatically owed them for their work. The president evidently figured out that the paycheck plan wouldn’t be feasible, so he, too, resigned immediately. The turnaround company terminated its contract the same day, leaving an empty therapy group with unpaid employees.
You can see that this is not going to end well. The clinicians sued to recover their pay. Perhaps sensing that Christian Psychotherapy might prove to be judgment-proof, they added claims against the president and the board chair, alleging that they were acting as employers in withholding paychecks. The suit cited a statute that defines employer to include companies, partnerships, etc., and “any similar entity acting directly or indirectly in the interest of an employer in relation to an employee.”
The president and board chair filed pleas in bar, asserting that “they were not employers, as that term is used in Code § 40.1-29(J), and that their resignations, before the wages were withheld, constituted an absolute bar to recovery” against them for the debt owed by the company. The learned judge heard evidence and then sustained the plea and dismissed the claims against the two individuals.
The Supreme Court awarded an appeal, presumably because the statute is quite new and hasn’t been interpreted yet. In a short opinion by the chief justice, the Supreme Court affirms, holding that the language of the statute doesn’t contemplate individual liability. That’s because it uses the word entity; the court rules today that that includes businesses but not humans. A similar statute expressly incorporates persons, so the legislature knew the difference.
The court’s analysis doesn’t address this, but I sense that the individual defendants’ actions played at least some role in this. The two defendants evidently were unwilling participants in corporate activity that they couldn’t stomach. They carried out the directives of the board, but then immediately resigned in what I assume was protest. The board had voted to withhold the final paychecks well after both individuals were gone. Note that the justices don’t reach this defense, but they had to know it.
I promised you a legal-writing milestone. There it is, on page 7 of the slip opinion:
“We believe it to be our duty to interpret the statute as written and when this is done our responsibility ceases.” Id. (internal quotation marks omitted). “The one canon of construction that precedes all others is that we presume that the legislature says what it means and means what it says.” Id. (cleaned up).
From what I can see, this is the first appellate opinion in the history of our fair Commonwealth that uses the relatively new parenthetical, “(cleaned up).” I first encountered this new practice a couple of years ago, when first advocates and then jurists took to removing all the editing clutter from truncated quotes. This method allows the writer to draft a normal-looking sentence while conveying to the reader that the original passage essentially says this, but that non-material changes have been made for ease of reading.
It may surprise my readers to learn that, in drafting briefs, I’m very conservative, stylistically speaking. For example, here at VANA, I routinely use contractions because that greatly aids readability for you. But in briefs, I almost never use them. (Once, perhaps ten years ago, I agonized for two days over whether to include one. I went ahead and did it, and the Supreme Court didn’t consign me to perdition for the sin. The next time, I pondered it for about two minutes before using one. Even so, I’ve probably used contractions three times in my entire briefwriting career.)
Now that we have what looks to me as judicial imprimatur for “(cleaned up),” I might consider using it, and you probably can, too.
A judicial turf war simmers beneath Ashland, LLC v. Virginia-American Water Company, from the Hopewell Circuit Court. The appellee is a water utility that operates in that city; the appellant is one of its customers, a manufacturer of chemicals.
In 2018, the utility performed maintenance that resulted in a ruptured water line. That caused an interruption in service. As a result, the manufacturer was shut down for a time. It sued the utility in Hopewell Circuit Court for about $500,000 in lost business and profits.
In response, the utility pointed to what looked like some solid affirmative defenses. Today’s opinion cites this language from the tariff – the “schedule of rates, rules, and regulations” issued by the SCC – that governs the utility’s provision of water service:
Virginia-American cited tariff Rule 8(f), which provides in part that Virginia-American “shall not, in any way or under any circumstances, be held liable or responsible to any party … for any losses or damage resulting from any … deficiency in … supply of water due to any cause whatsoever[,]” and Rule 17(a), which states that Virginia-American “does not guarantee a[n] … uninterrupted supply of water, and customers are cautioned to provide sufficient storage of water where an absolutely uninterrupted supply must be assured.”
The reader will immediately note that Justice Wes Russell, who pens this, his first opinion in his new billet, has not yet adopted the “(cleaned up)” protocol. But I digress.
The trial court asked the parties to brief a jurisdictional issue: Can a circuit court evaluate a case that’s based on an SCC tariff, or must these disputes be tried in that other tribunal? The parties evidently concurred that the circuit court was a perfectly appropriate forum for such a challenge. But the court ruled otherwise, holding that the Constitution of Virginia expressly provides that only the Supreme Court can review SCC decisions. The court accordingly dismissed the case.
Today’s opinion is notable for two things – something the court does, and something it doesn’t do. The SCV does reach the constitutional question, ruling that the circuit court wasn’t being asked to review the SCC tariff; just to apply it. Circuit courts can and do try such claims regularly. Indeed, in a footnote, Justice Russell points out that if a circuit court can’t hear such a case, then no tribunal can, because the SCC “lacks jurisdiction to resolve contract claims between utilities and their customers.”
The justices thus reverse the jurisdictional dismissal. The litigants here asked the Supreme Court to go ahead and address the demurrer, since that presents solely questions of law. In such situations, appellate courts – including the SCV – sometimes go ahead and decide the legal questions instead of remanding. That saves everyone time and expense, including the foreseeable expense of a second appeal by whichever party loses on remand.
No dice, the justices rule today. Acknowledging that the Supreme Court can do this, it nevertheless declines to do so. The opinion observes that the parties’ briefs focused on the jurisdictional issue instead of the affirmative defenses. The court accordingly remands to give the circuit court the first crack at the issues. Of course, subsequent legal proceedings will be all the longer now, because the losing party on remand will have an appeal of right in the Court of Appeals, followed, perhaps, by discretionary review in the SCV. This litigation will probably be ongoing for another two or three years.
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Something in the Ashland opinion caught my eye. It observed that the circuit court entered final judgment on May 24, 2021. That means that about 17 months passed between circuit-court judgment and the final decision in the Supreme Court. I checked the other two appeals decided today, to see how long the gap was for them. Ashley v. Cornell, from Virginia Beach, came down June 23, 2021, so about 16 months ago; Taylor v. Aids-Hilfe Koln left the circuit court August 13, 2021, just 14 months ago. This confirms my general sense that an appeal under the old regime, directly to the Supreme Court, generally takes about 15-16 months. It’s a bit faster now in the Court of Appeals; perhaps 12-13 months. But if the CAV loser seeks discretionary review at Ninth and Franklin, the writ process alone will add probably 6-8 months.