[Posted December 24, 2010] Just in time for Christmas, the Fourth Circuit has ruled in favor of Arlington County, a local Baptist church, and related entities in an Establishment-Clause challenge. The case is Glassman v. Arlington County, a suit by a neighbor of the church who objected to plans to raze the building and build a mixed-use structure comprising a new church on the first two floors and eight floors of residences (including plenty of low-income units) above.

In order to make the numbers work for a new building, the church decided to convey the land at the corner of 13th and Highland in Clarendon to a nonprofit corporation that would build the new structure. The two uses were divided by a declaration of condominium, separating ownership of the church’s portion from the residences. The neighbor sued, claiming that the entire project involved improper entanglement between the county (which financed much of the construction cost with loans) and the church.

A district-court judge in Alexandria granted the several defendants’ motions to dismiss, finding nothing improper about the county’s involvement in the development. On appeal, a panel of the Fourth Circuit affirms, reviewing the decision under the new pleading standard of Ashcroft v. Iqbal. As I read through this opinion, I could see that many of the neighbor’s conclusory assertions would be unlikely to survive the Iqbal plausibility analysis; but one allegation seemed promising: the suggestion that the low-income housing units were intentionally overvalued in order to fit the parameters for a loan.

That, if true, might well constitute a problem for the development. The practice of playing footsie with appraisal figures has gotten a few lawyers in hot water with the State Bar, especially during the wild ride that real estate values have taken us on lately. But this hope fades for the neighbor as the appellate court swats aside what it perceives as his unsupported conclusory assertions on this point. Plaintiffs suing in (or being removed to) federal court have to be very careful, because Iqbal requires a well-pleaded set of facts setting forth a plausible claim; you can’t fall back on bare notice pleading or general assertions of wrongdoing anymore.

A thought lingered in the back of my mind as I made my way through this opinion: How would this case have come out in state court? Practitioners who appear in both forums know well the huge difference between the way the Supreme Court of Virginia analyzes pleading issues and the way that Iqbal mandates that federal courts approach them. Here’s what I mean:

Iqbal and its primary Fourth-Circuit scion, Francis v. Giacomelli, provide that a judge must make a preliminary evaluation of whether the pleaded facts state a plausible basis for relief in federal court. If you check your dictionary for the definitions of plausible, the one that fits best in this context is “appearing worthy of belief.” I attended law school at modest academic institution in the Piedmont area of our Commonwealth, and they taught me there that juries, not judges, decide who’s “worthy of belief.”

The Supreme Court of Virginia adheres to the view I got in law school; in my opinion, if this appeal had been in the Supreme Court of Virginia instead of the Fourth Circuit, it’s foreseeable that the neighbor might well have obtained a reversal of at least that part of his claim, with a directive that the trial court let a jury decide whether the appraisal figures really had been cooked, making the project (at least plausibly) a sham.

I note this not to criticize the Fourth-Circuit panel in the slightest. Its analysis of the case was entirely correct under the federal approach (assuming, as I do, that there really were no pleaded facts behind the allegation of appraisal shenanigans). But this case is yet another illustration of the fundamental philosophical divide between federal and Virginia courts in evaluation of pleadings. In federal court, there really is little difference now between the motion-to-dismiss stage and the summary-judgment stage, aside from the defendant’s ability to introduce undisputed facts into the latter analysis. In sharp contrast, in Virginia’s state courts (I’m oversimplifying slightly here), if a plaintiff asserts it and can possibly prove it, he gets to a jury.

I was asked recently which US Supreme Court case in the past ten years I thought was the most important. I answered that it was Iqbal, which represented a complete abandonment of the notice-pleading requirements of Conley v. Gibson and the substitution of a new, palpably defendant-friendly rubric. Iqbal is a generational case in the field of civil procedure, much as Miranda v. Arizona was in criminal procedure and US v. Nixon was in the relationship between the branches of government. For the parishioners of a church in Arlington, it has made all the difference in the world.