LEGISLATURE “OVERRULES” SOME SCV HOLDINGS
(Posted May 25, 2017) For the fourth consecutive Thursday, there are no published opinions from the Supreme Court of Virginia. Instead of case analysis, let’s take a look at some recent legislative action that addresses previous SCV decisions.
Two years ago next month, the justices handed down Evans v. Evans, and the ruling came as a big surprise to dirt lawyers. The case allowed a tenancy by the entireties to be severed by a deed signed by only one spouse, as long as the other spouse did something to evince consent to the severance – in this case, recording the one-signature deed.
The way I learned real-property law, a tenancy by the entireties could be severed only by one of the three Ds: The death of one spouse; a divorce decree, or a deed signed by both spouses. Evans broke new ground in a way that no dirt lawyers foresaw (and the new method didn’t even begin with a D). I heard one such lawyer muttering that this ruling was because there were no former real-estate lawyers on the Supreme Court.
This year, the General Assembly passed Del. Adams’s HB 2050, which inserts a new provision:
Except as otherwise provided by statute, no interest in real property held as tenants by the entireties shall be severed by written instrument unless the instrument is a deed signed by both spouses as grantors.
Thus, as of July 1, we’ll be back to the three Ds. In theory, some titles might be in limbo if a one-signature deed went to record before July 1. But I doubt it; the circumstances of Evans are unlikely to pop up very often.
Wills and trusts
A year after startling dirt lawyers in Evans, the justices scared the bejeebies out of probate lawyers by handing down Thorsen v. Richmond SPCA. In that case, a woman directed her lawyer to prepare a will naming the SPCA as a contingent beneficiary of her entire estate. The will he prepared, however, described only her personal estate, and nobody noticed until it was too late (that is, after the testator died). That left her real estate to pass by intestate succession, costing the SPCA about $600K worth of land.
The SPCA sued the lawyer and won, and the justices affirmed. The decision contained two remarkable holdings. First, an heir has standing to sue for legal malpractice, on the premise that the heir is a third-party beneficiary of the contract between the lawyer and the testator. Second, the right of action for such a claim accrues on the death of the testator, which can be decades after the lawyer finished work on the job.
The first of these holdings was remarkable in that prior caselaw seemed to be completely contrary to the ruling. A 1989 decision, Copenhaver v. Rogers, had held that heirs couldn’t sue based on the will because they weren’t in privity with the lawyer. The justices neatly avoided that problem with this distinction: “The fatal aspect of the claim, however, was that [the Copenhaver heirs] had asserted they were intended beneficiaries of the estate rather than intended beneficiaries of the contract.”
As of July 1, that distinction won’t work anymore. Two bills – HB 1617, patroned by Del. Habeeb in the House; SB 1140, by Sen. Sturtevant in the Senate – wipe out the Thorsen holding. The new statute provides that the right of action accrues when the lawyer finished work on the project, so there’s no time-release explosion for the lawyer. It also states that only the testator or his personal representative can sue. That avoids the potential problem of a lawyer who wonders if his loyalty lies to his client or the heir, in case there’s a divergence.
The statute also contains a provision that immunizes lawyers from liability for things like statutory or common-law changes that occur after the representation ends. The Act of Assembly (though not the statute itself) also contains a sunset provision for previous probate work:
That if a cause of action for legal malpractice covered by this act accrued prior to July 1, 2017, and is barred because of the provisions of this act as of July 1, 2017, such cause of action shall be commenced on or before the earlier of either July 1, 2018, or the expiration of the applicable limitation period under the law in effect prior to the enactment of this act.
Accordingly, if a lawyer drafted a will in 1985 for a relatively young client and is worried about getting sued whenever that client gets around to dying, the lawyer can breathe easy starting in July 2018.
Procedure geeks, rejoice! The demurrer trap is no more.
I wrote extensively about the trap in 2012. It arises when a court sustains a demurrer but gives the pleader the opportunity to amend. The demurrer statute unambiguously allows the pleader to amend without waiving her right to argue on appeal that the first pleading was viable. But the justices have ignored that provision for decades; they commonly rule that when a litigant amends, they’ll only consider the amended pleading. In order to preserve an appeal about the first pleading, you must incorporate or refer to that original in your amended pleading.
That doesn’t sound so hard, except that some trial judges can get testy when you replead a count that they’ve dismissed with prejudice. And the incorporate/refer requirement isn’t in the statute; it’s essentially invisible for those poor souls who don’t read VANA faithfully.
Del. Minchew rode to the rescue earlier this year. His HB 1816 conforms the statute to court practice by expressly including the incorporate/refer provision. Now a pleader can presumably avoid judicial wrath by pointing to the statute and saying, “But I have to do it this way …”
I mentioned above that the trap is gone. Technically, it isn’t completely gone; but now it rests in plain sight, where all but the truly oblivious can see it and meet its requirements.
All three of these bills sailed through the legislature without a single dissenting vote. The bills regarding Evans deeds and the demurrer trap were based on recommendations of the Boyd Graves Conference.