ANALYSIS OF OCTOBER 31, 2019 SUPREME COURT OPINIONS
(Posted October 31, 2019) Just in time for Halloween, the Supreme Court of Virginia delivers a bag of goodies today, as we get four new published opinions.
When a court convicts and sentences a defendant, but suspends part of that sentence without indicating whether, or for how long, the defendant must be on good behavior, is the defendant still on the hook? And for how long? The court answers those two questions in Burnham v. Commonwealth this morning.
Burnham received suspended sentences for one felony and one misdemeanor in 2008. The sentencing order imposed a term of good behavior and placed him on supervised probation for a year. He evidently didn’t get the message, because the next year he faced a revocation proceeding. This resulted in resuspended sentences and a new, indefinite period of probation, but no express requirement of good behavior. He managed to struggle through this process to the point that he was released from probation in 2011.
All that goodwill he thus generated collapsed in 2015 when he was convicted of two new felonies. That brought on a new revocation proceeding for the original sentences. In response, Burnham claimed that the old sentences were now beyond the court’s reach: He had been released from probation, and besides, the second order superseded the first, and that second one didn’t require him to behave. An unimpressed trial judge revoked the suspension and then – surprise! – resuspended both sentences in full. Burnham went back on probation and now faces another ten-year period of good behavior.
The Court of Appeals was unmoved and shrugged off his appeal, but the justices agreed to take a look. Today they affirm in part and reverse in part. Good behavior is an understood, implicit part of any suspension of sentence, and while the court notes today that the better practice is to expressly include it to avoid a misunderstanding like this, no convicted person can expect a suspension to survive a new conviction.
As to Burnham’s other contention, a statute provides that when there’s no express period of suspension or probation, the court has jurisdiction to revoke the suspension for the maximum term of confinement authorized for the crime involved. That generates today’s divided result: The justices affirm the revocation of the suspension for the felony conviction, because the maximum sentence was ten years; but they reverse the one for the misdemeanor, because the trial court only had control of that for one year.
I’m always on the alert for issues of first impression in opinions, and there’s a whopper in Everett v. Tawes. The question is whether a trial court has the authority to retroactively modify a pendente lite support award before final judgment.
Shortly after the wife filed for divorce, the trial court conducted a pendente lite spousal-support hearing. The court received evidence that the wife’s financial needs were over $11,000 a month, while the husband’s tax returns reflected his income of $33,000 a month. The husband replied that his returns may show that, but his status as part-owner of several restaurants, and the use of pass-through entities, meant that he didn’t actually receive anywhere near that much.
The judge remarked that he really needed an expert to understand the returns, but the wife insisted that the local support guidelines required the court to use gross income.
The court eventually entered an order granting temporary support calculated from the full amount shown on the tax returns. This created an immediate arrearage of about $47,000. The husband paid what he could, but didn’t pay down the arrearage. The wife sought a show-cause order, and the husband moved the court to reconsider the pendente lite award.
At a hearing on those motions, a new judge presided. This time, the husband brought a CPA who explained that the husband was right: He only received income of about $10,000 a month, regardless of what the tax returns showed. The wife answered that the court had no authority to modify the arrearage, because her right to that amount had effectively vested.
At this, the judge found himself in a pickle. He felt that the existing award was unjust, but wasn’t sure he had the power to correct it. He asked for additional briefing on the issue, but even that didn’t leave him with a clear path; he stated that there was apparently “no answer to this question.” Clearly unhappy with the prior award, the court nevertheless declined to change the earlier ruling or erase the arrearage, either pendente lite or in the final divorce decree. The final decree calculated future support payments at a far smaller number.
Here’s an issue that will interest appellate lawyers and their trial cousins alike. Ordinarily, a court can modify an interlocutory order at any time before final judgment. But the wife pointed to statutes that prohibit vacating an existing award. The Court of Appeals held that “support payments vest as they accrue and may not be modified retroactively,” and affirmed.
Today the Supreme Court unanimously reverses in a two-step approach. Justice Goodwyn’s opinion first concludes that a pendente lite support award is indeed an interlocutory order. That means that the court had the full power to modify or vacate the earlier award, and the ability to correct errors in it, while it retained jurisdiction. The statutes cited by the wife, the court holds, refer to judgments in final divorce decrees, not interlocutory orders.
The second step is a simple one. The justices rule that the trial court’s ruling was influenced by an error of law, and under established precedent, that makes it an abuse of discretion. The Supreme Court thus remands the case so the trial court can evaluate fully the motion to rehear.
Both sides had sought awards of appellate attorney’s fees and costs. No doubt because of the novelty of this issue, the final sentence of the opinion denies both sets of requests. In a case like this, the court finds that the circumstances don’t support shifting either party’s costs and fees.
In my former life in the City Attorney’s Office, I handled several trials of challenges to real-estate tax assessments. That’s one of two claims in Virginia Int’l Gateway, Inc. v. City of Portsmouth. The tax payer owns and operates a huge marine-container terminal on the Elizabeth River down here in Tidewater. The facility receives container ships and uses cranes to offload containers and place them on waiting trucks. The City taxes the land and personalty separately; some of the cranes are on movable gantries.
For the tax year 2015-16, the taxpayer felt that the City’s assessment was too high. And we’re talking about a lot of zeroes here – the total assessment for realty was $360 million and for personalty around $30 million. The taxpayer’s experts put those figures at about $200 million and roughly $20 million, respectively. The taxpayer sued to correct those assessments, to obtain a correspondingly lower tax bill.
Portsmouth has a number of problems, but one of the most important ones is the way it’s hamstrung for real-estate-taxation purposes. It’s a small city, less than 47 square miles, and most of it is fully built out. More important, a large portion of that land is tax-exempt, because it’s owned by a government (several federal facilities are located there) or a religious institution. As an aging city that can’t expand by annexation, Portsmouth needs to hang on to whatever tax revenue it can. It hired an expert of its own and prepared for trial.
Today’s opinion evaluates two man issues. First, the taxpayer’s real-property appraiser hailed from New York and isn’t permanently licensed here in Virginia. He preliminarily valued the property for negotiation purposes; when that didn’t pan out, he obtained a one-year license from the Commonwealth. During that year, he conformed his prior work to Virginia requirements, reaching his ultimate conclusion toward the end of – but well within – the period of licensure.
So far, so good; but the trial came later, after the Virginia license had expired. The City objected to his testimony, pointing to a statutory requirement that one must be licensed to perform appraisal services here. The trial court found him well-qualified and allow him to testify. But months later, when the court got around to entering a final order, it reversed its previous ruling and found that it couldn’t allow the New York appraiser to testify because of the statute. Because this was the only basis for the taxpayer’s realty challenge, the court entered judgment for the City.
That left the personal-property-tax issue. There, the taxpayer’s expert traveled even farther, from Europe. He knew nothing about Virginia valuation standards, but was otherwise one of the premier experts in the world at valuing this kind of property. His assessment differed from the City’s largely because he applied a discount for transportation. He felt that there was no market for the property elsewhere in the U.S., so it would have to be sold to a European buyer. That entailed significant costs to ship the equipment overseas, thus depressing the price that such a buyer would pay.
The trial court ultimately rejected this testimony, too, finding the discount to be inappropriate and the valuation accordingly flawed. Here as well, the court entered judgment for the City. The taxpayer got a writ.
The justices today affirm in part and reverse in part. On the smaller personal-property-tax issue, the court finds that the trial judge acted well within his discretion in finding the European expert’s testimony didn’t overcome the presumption of correctness that all tax assessments enjoy. The court finds the question about transportation costs as a component of fair market value to be “intriguing,” but ultimately doesn’t reach that, because the trial judge made a legitimate finding that those costs were too speculative.
The court reverses today, however, on the real-estate-tax issue. Specifically, it points to a 1995 amendment to the statutory requirement for licensure. That amendment reserved to trial judges the right to decide if a particular expert was qualified to offer opinions, regardless of her Virginia licensure status at the time of the testimony. That means that the court erred in excluding the taxpayer’s expert on this ground alone. The justices accordingly remand the case for a new trial on the realty aspect only.
Given the numbers, this is a small win for the City and a larger win for the taxpayer. But it’s only an interim win: The taxpayer still has to overcome that presumption of correctness. My experience in City Hall tells me that that’s a formidable dragon.
The day’s longest opinion, at 41 pages, is Tingler v. Graystone Homes, Inc. This is a claim by a family who had a home built, moved in, and found significant mold problems. They demanded that the builder remediate the mold, but the remediation efforts only worsened the problems, to the point that the family had to abandon the home, fearing for their health.
I’m looking out for you, my dear readers, in giving you that Reader’s Digest version of the complex facts. If you want them in meticulous detail, click on the hyperlink to get Justice Kelsey’s copious recitation. For now, you need to know that the primary focus of this opinion is the familiar battleground of the boundary between tort and contract claims.
Over the years, the court has criticized the “more or less inevitable efforts of lawyers to turn every breach of contract into a tort.” There’s a reason behind this, of course: Tort damages are a lot sexier than their contract-law cousins. The homeowners sued both in tort and in contract, but the trial court sustained demurrers to all claims and dismissed the case.
Today the Supreme Court affirms in part and reverses in part, remanding the case for trial on some of the stated claims. The justices agree that the claims for negligent construction are contract claims only, but the negligent repair claims are different. The former assert that the contractor had a duty to do something (construct a home that was safe from water damage and the resultant mold intrusion) and didn’t do it, while the latter asserted that the contractor tried to perform the remediation and botched the job.
Today’s opinion lays out what should be a helpful decisionmaking standard for these claims. Allegations of nonfeasance of duties, where a contract underlies those duties, sound in contract. Allegations of misfeasance (and, a fortiori, of its malevolent cousin malfeasance) can give rise to tort claims. The rub is that, on remand, the homeowners are going to have to distinguish which of their claimed injuries stemmed from the later efforts to repair the damage, because that’s all they’ll be able to recover for.
The case has an interesting angle on the contract claim that isn’t likely to reoccur often. The land on which the contractor built the home was owned by a family LLC. But the homeowners themselves signed the construction contract. The builder defended against the LLC’s contract claim by pointing out that the LLC wasn’t a party to the contract. Today, the justices throw the LLC a lifeline, accepting the argument that the pleadings stated a facially valid third-party beneficiary claim. That means that the homeowners and their company are all back in the litigation.
The lesson for lawyers representing tort plaintiffs is to craft your allegations, to the extent you can, to allege that the defendant’s misstep was misfeasance or malfeasance. Alleging nonfeasance, the failure to do something, will foreseeably consign you to the contract aisle, and those more-limited damages.
One last point: The justices heard oral argument in this case in June. This is the last remaining appeal in which now-retired Justice McClanahan participated. The listing of the justices to begin the slip opinion inconspicuously omits any mention of her; it simply lists the other six justices who voted (unanimously, as it turns out) on the outcome.
In the past, when an opinion came down after a member of the court retired, died, or otherwise left the court, a footnote to the opinion noted that fact: “Justice X participated in the hearing and decision of the case prior to the effective date of her retirement on ________.” “Senior Justice Y participated in the hearing and decision of the case before his death on ________.”
As my faithful readers will recall, the Supreme Court endeavored to decide as many appeals as possible that had been argued before Justice McClanahan’s retirement. That resulted in a flurry of rulings in late August. The last such flurry came on February 12, 2016, the day Justice Roush’s gubernatorial appointment was set to expire. The court achieved a rare 100% clearance rate that day. It almost did so again this August.
This opinion took longer to decide than was reasonably practical for an August decision date. Reading the opinion will show you why; Justice Kelsey packs no fewer than 30 footnotes into the 41-page ruling. It’s quite an effort. The omission of Justice McClanahan’s name, even in a footnote, signals to me that the court doesn’t want to create controversy. But with a unanimous opinion, it’s hard to argue that the presence of a now-retired jurist could have affected the outcome.