the expert of my enemy is my expert: conflicts of ... · expert’s opinions and credibility in...

The Expert of My Enemy Is My Expert: Conflicts of Interests

Amongst Expert Witnesses*

by Maya M. Eckstein and Paul Nyffeler

Every litigator knows that the right expert canbethedifferencebetweenwinningandlosing.Thismakesgoodexperts rarecommodities. Over time,top experts develop specialties and work for onepartyafteranotherindozensofcases,aperfectrec-ipefordevelopingconflictsofinterest.Asaresult,itiscriticalforexpertsandtheattorneysconsideringhiringthemtoconductthoroughconflictscheckstoidentifypotentialproblems,suchasanexpert’spriororevencurrentengagementwithanopposingparty. But what standards should experts applywhenconsideringconflicts?Surprisingly,whileattorneysare governed by strict ethical rules, conflicts-of-interest rules for experts are virtually nonexistent.In fact, the “Guidelines for Conduct for ExpertsRetained by Lawyers,” recently drafted by theAmericanBarAssociation’sTaskForceonExpertCodeofEthics,werewithdrawnfromconsiderationbytheABA’sHouseofDelegates.1 Amongotherthings, the proposed Guidelines included an unre-markableprohibitionthatprecludedanexpertfromacceptinganengagement,absentinformedconsent,“iftheacceptancewouldcreateaconflictofinterest,i.e. that the expert’s provision of services will be

materiallylimitedbytheexpert’sdutiestoothercli-ents,theexpert’srelationshiptothirdparties,ortheexpert’s own interests.”2 Notably absent, though,fromeventhisproposalisaprohibitiononanexpertacceptinganengagementthatcouldmateriallyharmacurrentclient’sinterests. Sowhatstandardsapply?Virginiacourtsapplythe same standards to expert testimony that theyapply to any other testimony: “where the prob-able prejudice exceeds the probative value of theevidence, the evidence should be excluded.”3 Inassessingwhetherrelevanttestimonyisadmissible,acourtis“alwaysbalancingtheprobativevalueoftheevidenceagainstthedisadvantages(delay,con-fusion,prejudice,surprise,etc.)whichmayattenditsadmission.”4Forexample,apartyhastherighttochallengeawitness’scredibilitybycross-examiningthewitnesswithpriorinconsistentstatements.5 These standards, though, do not provide sub-

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VolumeXVII,NumberI Summer2012

TheExpertofMyEnemyIsMyExpert:ConflictsofInterestsAmongstExpertWitnesses. . . . . . . . . . . 1, 4by Maya M. Eckstein and Paul Nyffeler

LetterFromtheChair. . . . . . . . . . . . . . . . . . . . . . . . . . . 2by Scott Ford

PracticalTipsforUsingRequestsforAdmissions. . . . . 7by Michael W. Robinson

HowtoAdviseYourCorporateClientsThroughtheWonderfulWorldofE-Discovery–AnIn-HousePerspective. . . . . . . . . . . . . . . . . . . . . . . 12by Jeffrey L. Stredler

MakeitSimple!PreparinganArgumentforTrialCourt. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17by Hon. Leslie L. Lilley

EvidenceCorner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20by Kristine H. Smith

SupremeCourtofVirginiaCivilCases. . . . . . . . . . . . 21LitigationSectionBoardofGovernors . . . . . . . . . . . . 49

Table of Contents

The experT of My eneMy — cont’d on page 4

Maya M. Eckstein is a partner at Hunton & Williams’s Richmond office. Paul Nyffeler is an associate there.

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LitigationNews Summer2012

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Irecentlysatdownandread“ByGeorge!:Mr.Washington’s Guide to Civility Today,” a slimvolumethatreproduces110thoughtsonetiquettethatGeorgeWashingtonwrote out as a teenagermorethan250yearsago.Manyhistoriansbelievethat the rules represent a compilation of existingmaterialsandWashington’sthoughts. According to a 1996 U.S. News/Bozell poll,89% of Americans long for greater civility inpublic discourse. As trial lawyers called uponto assist the public in resolving disputes, weare in a unique position to improve civility inhowwemodel behavior. President Lincoln oncecommented, “asapeacemaker, the lawyerhasasuperioropportunityofbeingagoodman.” ABA President Stephen N. Zack recentlycommented that “as lawyers,wemust stillhonorcivility.” “Words matter. How we treat othersmatters.Thewayotherstreatusmatters,notonlyfortoday,butforgenerationstocome.” Our professional reputations are built over acareerbasedinlargeparthowwehaveinteractedwith each other, the Bench, our clients, and thepublic. In addressing newly admitted attorneys onNovember1,2004,JusticePeterT.ZarellaoftheConnecticutSupremeCourtsaid:

The practice of law has historically beenreferredtoasanobleprofession.Theincreaseof incivility and unprofessional behavior,however, has tainted the public’s view oflawyers, and so we must join forces torestorenobilitytoourprofessionthroughourcivil treatmentof,andrespectfor,everyonewhohasaroleinthelegalprocess,whether

we are on the same side--or the opposingside--of a dispute.We must be adversarieswithoutbeingenemies.Wemustreturntoapracticeoftakingthehighroadwithfairness,courtesyandsimplegoodmanners.Wemustmendfencesratherthantramplethem.

Many of Washington’s rules struck me asrelevant to our work as lawyers and showingcommon decency and civility to others. Theyincludethefollowing:1. Every action done in company ought to be

with some sign of respect to those that arepresent.

6. Sleep not when others speak, sit not whenothersstand,speaknotwhenyoushouldholdyourpeace,walknotonwhenothersstop.

14. Turn not your back to others, especiallyin speaking; jog not the table or desk onwhichanotherreadsorwrites;leannotuponanyone.

34.It is goodmanners toprefer them towhomwespeakbeforeourselves,especiallyiftheybeaboveus,withwhominnosortweoughttobegin.

35.Letyourdiscoursewithmenofbusinessbeshortandcomprehensive.

40.Strive not with your superior in argument,but always submit your judgment to otherswithmodesty.

41.Undertakenottoteachyourequalinthearthimselfprofesses;itsavorsofarrogancy.

42.Let your ceremonies in courtesy be properto the dignity of his place with whom youconverse,foritisabsurdtoactthesamewith

Letter From the Chair • Scott Ford

How We Treat Others Matters

2

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aclownandaprince.45.Being to advise or reprehend any one,

considerwhetheritoughttobeinpublicorinprivate,andpresentlyoratsomeothertime;inwhattermstodoit;andinreprovingshownosignsofcholorbutdoitwithallsweetnessandmildness.

49.Usenoreproachfullanguageagainstanyone;neithercursenorrevile.

50.Benothasty tobelieveflyingreports to thedisparagementofany.

56.Associateyourselfwithmenofgoodqualityif you esteem your own reputation; for ‘tisbettertobealonethaninbadcompany.

58. Let your conversation be without maliceor envy, for ‘tis a sign of a tractable andcommendable nature, and in all causes ofpassionpermitreasontogovern.

59.Neverexpressanythingunbecoming,noractagainsttherulesmoralbeforeyourinferiors.

65.Speaknotinjuriouswordsneitherinjestnorearnest; scoff at none although they giveoccasion.

67.Detractnotfromothers,neitherbeexcessiveincommanding.

69.If twocontend together takenot thepartofeitherunconstrained,andbenotobstinateinyourownopinion.Inthingsindifferentbeofthemajorside.

73. Think before you speak, pronounce notimperfectly, nor bring out your words toohastily,butorderlyanddistinctly.

76. While you are talking, point not with yourfinger at him of whom you discourse, norapproach too near him to whom you talk,especiallytohisface.

85. In company of those of higher quality thanyourself, speak not ‘til you are asked aquestion,thenstandupright,putoffyourhatandanswerinfewwords.

88.Benottediousindiscourse,makenotmanydigressions,norrepeatoftenthesamemannerofdiscourse.

Weshouldallbemindfulof the rulespennedbyWashingtonover250yearsagoasweadvocatefor our clients in a way that we and the publicwillbeproud.Further,wemustrememberthattheconflictsweareretainedtoassistarebetweentheclientsandnotthelawyers.F

stantial guidance in the expert-conflict-of-interestscenario.Thisisparticularlytrueinthesituationinwhichanadversepartyhiresaclient’sexpertasitsown,andevenmoresowhentheexpertalreadyhasbeen retained by the client in a pending, separate,ongoinglitigation.Inotherwords,theexpertwouldbetestifyingforaclientinonecase,butagainstthesameclientinconcurrentlitigation. These situations raise thornyissues of confidentiality. Take,forexample, thesituation inwhichClientABChiresExperttotestifyinCase1,whichwasfiledbyOpponentBadGuy. Expert is then hired byABC’sopponent(OpponentShrewdGuy) in Case 2, to testify againstABC.BecausetheExpertmayhavebeen privy to ABC’s confidentialinformationinCase1,oreventrialstrategyorotherattorneyworkproduct,ShrewdGuypotentiallyhasobtainedanunfairadvantage,asExperthasinforma-tionhewouldnothavebutforhisretentionbyABCinCase1.Moreover,anyactiontakeninCase2toeither remove Expert or effectively cross-examinehimbyimpeachinghiscredibilitywillharmABC’seffortsinCase1.LegitimateeffortstoattackExpertinCase2wouldbereadyammunitionforBadGuytouseagainstABC’sexpertinCase1.Thispredica-menteffectivelyeliminatesABC’srighttochallengeExpert’sopinionsandcredibilityinCase2,forfearofharmingABC’spositioninCase1.Tomakemat-tersworse,thissituationunderminesABC’strustinExpert,makingitwonderineverymeetingforCase1whetherExpertistheretoassistABC’sinterestsinCase1orasOpponentShrewdGuy’sagentinCase2,obtainingunfetteredaccesstoABCwhichnooneelse could obtain. A crafty adversarymight evenseekoutanopponent’sexperttoputit injustsuchanimpossiblesituation. Twooptionsareavailable toparties facedwiththisscenario. First,courtsacrossthecountrytypi-cally apply a traditional three-pronged test to the

expert-conflict of interest analysis. Second, if anexpertwasworkingforaclientinonelitigationbutagainsttheclientinanotherlitigation,rulesprohibit-ingex parte contactswithopposingexpertspoten-tiallycanbeusedtosanctionopposingcounsel.Three-Pronged Analysis Courtsacross thecountryhaveapplieda three-

pronged test to such situations.Under the traditional analysisappliedtoexpert-conflictsituations,courts consider, first, whether itwas “objectively reasonable forthe first party who claims to haveretained the expert to concludethat a confidential relationshipexisted” and, second, whether“any confidential or privileged

information[was]disclosedbythefirstpartytotheexpert.”6 Courtsoftenalsoapplya thirdelement:“thepublic interest in allowingor not allowing anexperttotestify.”7 In analyzing the first prong—whether it isobjectivelyreasonableforthefirstpartywhoclaimsto have retained the expert to conclude that aconfidential relationship existed—courts consider“whethertherelationshipwasoneoflongstandingand involved frequent contacts instead of a singleinteraction . . . whether the expert is to be calledas a witness . . . whether alleged confidentialcommunicationswerefromexperttopartyorvice-versa, and whether the moving party funded ordirected the formationof theopinion tobeofferedat trial.”8 Additional factors include entering intoformal confidentiality agreements, exchange ordiscussionofworkproduct,whethertheexpertwasaskednottodiscussthecasewithanadverseparty,andwhethertheexpert’sopinionwasderivedfromor related to work conducted while working forthe previous party.9 If the expert “met but oncewith counsel, was not retained, was not suppliedwithspecificdatarelevanttothecase,andwasnot

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The Expert of My Enemy cont’d from page 1

[C]ourts across the

country typically apply a

traditional three-pronged

test to the expert-conflict-

of-interest analysis...

5


requested toperformany services,” the first prongcannotbemet.10 Regardingthesecondprong—whetheranycon-fidential or privileged information was disclosedbythemovingpartytotheexpert—courtsconsiderwhether theexpertandmovingpartydiscussedthemovingparty’s “strategies in the ligation, thekindofexpert[themovingparty]expectedtoretain,[themoving party’s] views of the strengths andweak-nesses of each side, the role of each of the [mov-ing party’s] witnesses to be hired, and anticipateddefenses.”11 Purely technical information is notconsideredconfidentialinformation.12 Finally,inanalyzingthethirdprong—thepublicinterest—courtsconsidersuchissuesas(1)whetheranyprejudicemightoccur if an expert is or is notdisqualified,13 (2) the appearance of a conflict ofinterest,14 (3) the availability of a replacementexpert and the burden associated with obtaining anewexpert,15 (4) “ensuringpartieshaveaccess toexpert witnesses who possess specialized knowl-edge and allowing experts to pursue their profes-sionalcalling,”16and(5)prohibiting“unscrupulousattorneysandclients[fromcreating]aninexpensiverelationshipfrompotentiallyharmfulexpertssolelytokeepthemfromtheopposingparty.”17 Evenifthethree-prongedtestismet,someexcep-tionshavebeenmadeforexpertsconcurrentlyserv-ingforandagainstapartywhen thesubjectsof thecaseandtheirtestimonyaresufficientlyunrelated.18

Ex Parte Communications In Virginia courts, the only proper method forobtaining discovery of an expert witness is byinterrogatory or deposition.19 Courts around thecountry have interpreted similar rules to implicitlyprohibitanyex partecommunicationswithanadverseparty’sexpertwitness.20Infact,courtshavedeemedsuchex partecontactsanethicalviolationunderABAModel Rule of Professional Conduct 3.4(c), whichstates that “a lawyer shall not knowingly disobeyanobligationundertherulesofatribunal.”21Evenstate bars have opined on the permissibility of ex

partecontactswithadverseexperts.22 Violation of this prohibition has resulted insevere sanctions. For example, a finding of ex parte communications can result in exclusion of aparty’sexpertwitness.23 TheUnitedStatesCourtofAppealsfortheNinthCircuitreversedajudgmentbecause the appellee’s attorney engaged in an ex parte meeting with an adverse expert, the courtremanded the case for retrial and sanctions.24 InCalifornia,aone-hourmeetingdiscussingthehiringof an adverse expert resulted in disqualificationof both the expert and the law firm.25 Thus, anattorney knowingly takes a risk of disqualificationwhenengaginginex partecommunicationswithanadverse party’s testifying expertwitness. No casehas dealtwithwhether a partymay speak to theirexpert serving as an opponent’s expert in anotherlitigation without the opponent’s counsel present,butcautioniswarranted.

Conclusion Thepotentialforconflictsofinterestforexpertsshouldbeaconcernforlitigatorsandexpertsalike.Experts trade in their credibility and reputations,providing enormous incentive for self regulation.Yetthelackofnationalethicsstandardsforexpertsand reliance on experts tomonitor themselves forpotentialconflictsofinterestcouldexposeattorneysand their clients to unforeseen risk. Additionalresearch may be the difference between having atestifyingexpertandleavingyourclientwithoutanexpert—orevenitschosencounsel.F

*Editor’s note: The authors prepared this articlebeforetheSupremeCourtofVirginiadecidedArnold v. Wallace, ___ Va. ___, 725 S.E.2d 539 (2012).Arnoldaddressessomeoftheexpert-witnessconflict-of-interest issues that Ms. Eckstein raises in herarticle.AsummaryofthefactsandholdingsofArnoldappearsatpage33ofthisnewsletter.

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EndnoTES1.See AmericanBarAssociation,http://www.abanow.org/2012/01/2012mm300/(withdrawingresolutiontoadoptStandardsofConductForExpertsRetainedByLawyers)(January2012).2.Id. §IV.3.Wynn v. Commonwealth,5Va.App.283,291(Va.Ct.App.1987)(citingCumbee v. Commonwealth,219Va.1132,1138(1979))(emphasisadded).4.Evans-Smith v. Commonwealth,5Va.App.188,197(Va.Ct.App.1987)(citationomitted).5.Smith v. Commonwealth,15Va.App.507,511(Va.Ct.App.1992).6.Koch Ref. v. Jennifer L. Boudreaux MV,85F.3dat1182(citingMayer v. Dell,139F.R.D.1,3(D.D.C.1991));see also Rhodes v. E.I. Du Pont De Nemours & Co.,558F.Supp.2d660(S.D.W.Va.2008);Paul v. Rawlings Sporting Goods, Co.,123F.R.D.271,281-82(S.D.Ohio1988);Shadow Traffic Network v Superior Court of Los Angeles County,29Cal.Rptr.2d693,699-700(Cal.Ct.App.1994).7.Id.(citingEnglish Feedlot, Inc. v. Norden Lab., Inc.,833F.Supp.1498,1504-05(D.Col.1993);Great Lakes Dredge & Dock Co. v. Harnischfeger Corp.,734F.Supp.334,336-37(N.D.Ill.1990)).8.Stencel v. Fairchild Corp.,174F.Supp.2d1080,1083(C.D.Cal.2000).9.Hewlett-Packard Co. v. EMC Corp.,330F.Supp.2d1087,1093(N.D.Cal.2004).10.Mayer,139F.R.D.at3-4(internalquotationsandcitationsomitted);see also Wang Laboratories, Inc. v. Toshiba Corp.,762F.Supp.at1246,1249n.5(E.D.Va.1991);Nikkal Ind., Ltd. v. Salton,689F.Supp.187,190(S.D.N.Y.1988).11.Koch Ref.,85F.3dat1182(quotingMayer,139F.R.D.at4).12.Id.(citingNikkal Ind.,689F.Supp.at191-92).13.Stencel,174F.Supp.2dat1083.14.Hewlett-Packard,330F.Supp.2dat1095.15.United States ex rel., Cherry Hill Convalescent Ctr., Inc. v. Healthcare Rehab Sys., Inc.,994F.Supp.244,251(D.N.J.1997).16.English Feedlot, Inc. v. Norden Labs., Inc.,933F.Supp.1498,1505(D.Colo.1993).17.Paul v. Rawlings Sporting Goods Co.,123F.R.D.278.18.See Bone Care Int’l LLC v. Pentech Pharma. Inc.,2009U.S.Dist.LEXIS7098,*4-5(N.D.Ill.Feb2,2009)(threedifferentexpertstestifyingaboutdifferentmedicinalcompositionsfortreatingdifferentdisorderswereallowedtotestifyadverselytoclient);Atlantic City Assoc. LLC v. Carter & Burgess Consultants, Inc.,2007U.S.Dist.LEXIS1185,*4(D.N.J.Jan.5,2007)(twoexpertsforoneclientwereallowedtotestifyagainsttheirclientinanotherlitigationbecausesubjectswereunrelatedandnoconfidentialinformationwasshared).19.SeeVirginiaSupremeCourtRule4:1(b)(4).

20.See Erickson v. Newmar Corp.,87F.3d298,301-02(9thCir.1996);Campbell Indus. v. M/V Gemini,619F.2d24,26-27(9thCir.1980);Plasma Physics Corp. v. Sanyo Elec. Co.,123F.R.D.290,291-292(N.D.Ill.1988);In re Firestorm,916P.2d411,415-16(Wash.1996);Heyde v. Xtraman, Inc.,404S.E.2d607,611-12(Ga.Ct.App.1991).21.See Erickson,87F.3dat301-02;see also,Va.R.ProfessionalConduct3.4(d).22.CompareAlaskaBarAss’nEthicsComm.,Op.84-8(1984)withAlaskaBarAss’nEthicsComm.,Op.85-2(1985)(barassociationreversingitsowndecision,ultimatelyprohibitingex parte contactswithadverseexperts).23.See Koch Ref. Co. v. Jennifer L. Boudreaux MV,85F.3d1178,1183(5thCir.1996)(“[W]earetroubledthat...counselforthetuginterestsmadeseveralex partecontactswith[theexpert]andapparentlyemployedhimastheirconsultant...”);Campbell Indus.,619F.2dat26(affirmingdenialofdefendant’srequesttocallplaintiff’sexpertasitsownexpertwitnessafterrevealingdefensecounsel’sex parte contactswiththeexpert);Heyde v. Xtraman,404S.E.2dat611-12(affirmingexclusionofdefendant’stestifyingexpertwitnessbecausewitnesswasplaintiff’snon-testifyingexpertbeforedefendantengagedinex parte contactswithhim).24.Erickson,87F.3dat304.25.Shadow Traffic Network v. Superior Court,29Cal.Rptr.2d693,694-95(Cal.Ct.App.1994).F

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Practical Tips for Using Requests for

Admissions

by Michael W. Robinson

Everyone has a default discovery plan: serveinterrogatoriesandrequeststoproducedocuments,and then proceed to depositions. Perhaps as aresult, requests for admissions are (1) under-utilized, and (2) frequently poorly utilized. Butrequests for admissions can be a very importantand effective tool, and shouldnot be relegated toanafterthought.Soletmeoffersomeprimerpointsand perhaps a few tips and useful citations oneffectively incorporating requests for admissionsintodiscoveryplans. Therulesgoverningrequestsforadmissionsarealmostidenticalinstateandfederalcourtpractice.Accordingly, federal court decisions addressingrequests for admissions are deemed “informativebut not necessarily binding” in the state courtsystem.1 In state court, of course, requests foradmissionsmay play a farmore strategic pretrialrole because requests for admissions may be theonly hope for a posture that allows summaryjudgment.2 UnderVirginia SupremeCourtRule 4:11 andFederalRule36,apartymayseekanadmissionofastatementoropinionoffactortheapplicationoflawtofact,oronthegenuinenessofanydocument.Dependingonwhetheryou are in stateor federalcourt,therespondingpartyhastwenty-oneorthirtydays to respond, and the failure to respond to arequestwithinthattimeresultsintherequestbeingdeemed admitted. Subject to proper objections,a responding party has a duty to admit so muchof the request as good faith requires, to deny therequest, or to “set forth indetail the reasonswhy

theansweringpartycannottruthfullyadmitordenythematter.” A denialmust fairly respond to thesubstanceoftherequest,andifgoodfaithrequiresthatapartyqualifyitsanswerordenyonlyapart,the response shall specifywhich part is admittedand thatwhich is qualifiedordenied. There is aduty of reasonable inquiry and a party may notclaim lack of information as a response unlessit certifies that it has taken reasonable steps toascertain the informationand that the informationknownorreadilyobtainableisinsufficienttoallowanadmissionordenial.3 In lightof those requirements, requestswouldappeartobeapowerfultool.Buttherearelimits.And those limits reflect the primary purposes ofrequests foradmissions. Thus,parties shouldnotsimply attempt to transform a Complaint into aseries of requests for admissions.4 Nor shouldextensiverequestsforadmissionsbeservedinthe“wild-eyed hope” that a party will simply fail torespondinatimelyfashion.5Infact,whilerequestsarelegitimatelyservedtonarrowissues,theyshouldnotbeusedtotrytopreemptivelyresolvedisputedfactsofthecaseinhopesofcreatingafee-shiftingmechanism,usedtobootstrapdepositiontestimonyinto admissions conclusively determining facts,or used toburden apartywith responding tooneparty’sversionofevents.6 So how should we use requests? If you areusingrequestssolelytoestablishthefoundationforadmittingdocuments,therequestscomenaturally.But when expanding your use to address otherfacts, the landscape changes, and precision is thewordoftheday.Herearesomesuggestions:

1. don’t approach requests for admissions like discovery. Inboththestateandfederalrules,therulesgoverningrequests for admissions appear in the sectionsaddressingdiscovery. Butdon’tapproachrequestslikediscovery;theyserveadifferentpurpose.Mostcourtsviewrequestsforadmissionsasservingtwoessentialpurposes:first,tonarrowissuesfortrialMichael W. Robinson is a partner at Venable LLP’s Tysons Corner office.

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or summary judgment; second, to facilitate thepresentationofthematterattrial.Inemphasizingthese purposes, courts have gone so far as to saythat requests for admissions are not discovery.7Andcourtshaveupheldorrejectedtheproprietyofrequestsbasedonwhethertherequestsfurtherthetwogoals.8 Sokeep these twopurposes inmindwhen drafting, responding to,and arguing the appropriatenessoforthesufficiencyofresponsestorequestsforadmissions.

2. draft with specificity and focus each request on a singular fact.Unlike interrogatories, requestsfor admissions should not seekdetailed responses, or any additional factualinformation. Well-draftedrequestsshouldbeabletobeanswered inoneword: either“admitted”or“denied.”Draftwiththatgoalinmind.

The drafter “bears the burden of settingforth in necessary, but succinct, detail, the facts,events or communications to which admission issought.”9 Requests should be “drafted in sucha manner that the response can be ascertainedby a mere examination of the request and thecorrespondinganswer.”10Thefactsoreventsforwhich admission is sought should be set forth inseparate requests; one fact per request. As onecourtexplained,“eachrequestforadmissionmustbedirect,simple,and‘limitedtosingularrelevantfacts.’”11 While theVirginiaSupremeCourthasnotgivensuchdetailedguidance,ithasimposedadutyonthepartyrequestingadmissionsto“phrase[the]requestswithclarityandfairness.”12

3. don’t rely on the responding party’s obligation to partially admit facts in drafting your requests. Inlightofthedefendant’sdutytoparcelanyportionsofarequestthatcanbeadmitted,adraftermaybetemptedtosetforthbroad

requests.Resistthattemptation.Apartymayproperlyobjecttovagueorambiguousrequests,andneednotparceloutforresponseportionsoftherequest.13 Compoundrequests,orrequeststhatincludeinterdependentfactsareparticularlyproblematic.Notwithstandingthegeneraldutytoundertakeingoodfaithtoadmittheportion

ofarequestthatistrue,asinglerequestthatcontainsinterdependentfactscanbeproperlyobjectedto,ordeniedinitsentiretyifonefactonwhichtherequestispremisedisdenied.14Simplyput,anattorney“draftscomplexrequestsathisperil.”15

4. The right to seek requests based on the application of law to facts does not extend to legal conclusions.Afrequentsourceofdifficultyorconfusionarisesfromtheefforttoattempttoobtainlegalconclusionsthroughrequests.Therulespermitrequestsbasedon“theapplicationoflawtofact.”Buttherulesdonotpermitrequeststoaddressquestionsoflaw.16 Unfortunately, there is no bright line test toapply to this tension. Requests that simply seekratification of the legal conclusions one party“attaches to the operative facts” are improper.17Likewise,requestsseekinganadmissionon“pure”questions of law–for example, that the statuteof limitations for an action based on a writtencontract is five years – are improper.18 Andrequestsseekingadmissionsastotherequirementsof statutesor regulationshave likewisebeenheldimproper.19 Incontrast, requestsseekingadmissionsonaninterpretation of a contract or on a party’s legalobligations under a contract are proper.20 Andthemanner inwhich statutesor regulations applytospecific,non-hypotheticalfactsalsomaybethesubjectofrequests.21Sobeawarethatthecloseryour requests come to any legal conclusion, the

Well-drafted requests should

be able to be answered in one

word: either “admitted” or

“denied.” draft with that goal

in mind.

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chancesof a properobjection increases. Seekinganadmissiononamattergenerallyreservedtothecourt—suchaswhetherapersonisapublicfigurefor purposes of a defamation claim—will drawan objection. There is a big difference betweenrequesting an admission that an injury or breachof contract or breach of legal duty occurred on aparticular day, and asking whether the cause ofactionaccruedonaparticularday.

5. Challenge objections or improper responses through a motion to determine the sufficiency of the response; but never expect the court to require a party to admit any fact.The proper means to address an objection orresponsetoarequestforadmissionisamotiontodetermine the sufficiency of the response. Thereis nomotion to compel responses to requests foradmissions(althoughIhaveseenmanyargued,andprobably argued a few as well). The provisionsofVirginiaSupremeCourtRule4:12andFederalRule37regardingmotionstocompeldonotapplyto requests for admissions. If the courtoverrulesan objection or determines that a response isinsufficient, it may order a response or, in rarecircumstances, deem the request admitted.22Dependontheformer;deemedadmissionsarerareand I am not aware of any reported cases wherea court deemed a matter admitted on an initialdeterminationofsufficiency. Do not expect, however, to have the courtorderthataparticularrequestbeadmitted,eveninthe faceofoverwhelmingevidenceof its truth.23Thecourtwillnotmakepretrialdeterminationsofwhetherarequestshouldorshouldnotbeadmitted;itwill simply order a response. And “denied” isalways a sufficient response. 24 If a request isdeniedandthatmatterisprovenattrial,theremedyistoseekanawardoffees. A few quick notes on common objectionsand responses are in order—though the topicmerits an additional article. The objection that

amatter is disputed andmust be resolved at trialis an insufficient response. Likewise, a partywho claims that it cannot respond due to lack ofinformation must certify that it made reasonableinquiry into thematter—and courts will look forevidenceofwhatstepswere taken. Thescopeofthedutyofreasonableinquirymaydifferinvariouscircumstances,itisnotnecessarilylimitedtowhata party knows; itmay include the duty to reviewdocuments,testimony,ortoseekinformationfromotherparties.25 Finally,inseekingadmissionsaboutthecontentsof and statements in documents, the objection orresponse that the “document speaks for itself” isseldomrecognized.26 Indeed,onecourthasheldthat not only should requests to admit verbatimquotesbe responded towithoutobjection, apartycan ask admissions by paraphrasing documents;“If, on the other hand, the request for admissionparaphrases a document, it should be admitted iftheparaphraseisaccurateanddeniedifitisnot.”27

6. Leave of court is required to withdraw or amend admissions. Admissions are conclusive for purposes of thependingactionandapartyhasno right toamendanadmission.28Apartymustseekleaveofcourtto amend or withdraw any admission, includingadmissionsmadebyafailuretorespondtoproperlyserved requests. If youhave failed to respond torequestsforadmissionswithintheprescribedtime,thepropermotionforreliefisamotiontowithdrawtheadmissions(sincebyruletherequestsarenowdeemedadmitted).29 Both the federal and state court rules setout a two prong test for determining whether aparty should be permitted to amend or withdrawadmissions.First,willthewithdrawaloramendmentpromote the presentation of the merits of theaction? Second,will allowing thewithdrawal oramendment prejudice the party that obtained theadmission?30TheVirginiaruleexpresslyallocatesthe burden of each party. The party seeking to

10


withdrawadmissions is required to showwhetherthewithdrawalwouldpromotethepresentationofthematteron themerits. Thepartyopposing themotionbearstheburdentoshowprejudice.Whilethefederalruleissilentonthisburden,mostfederalcourts have adopted a similar allocation of theburdenofproof.31 The first prong generally is met by showingthat the admission removes an important anddisputedaspectofthemeritsofthecasefromactualconsideration. The Virginia Supreme Court hasrecognizedthatthisprongismet“whenupholdingthe admissions would practically eliminate anypresentation of the merits of the case.”32 Inessence, thewithdrawalshouldservetoaidinthe“ascertainment of the truth and the developmentof the merits.”33 The second prong–prejudiceto the party that obtained the admission–does notconsideratalltheprejudiceofnowhavingtoproveapreviouslyadmittedpoint.Rather,theprejudicemustaddressthedifficultyapartyfacesbecauseofthewithdrawalof theadmission, i.e.,“thesuddenneedtoobtainevidencewithrespecttothequestionspreviouslyansweredbytheadmissions.”34 Contrarytopopularbelief,thereisno“excusableneglect” standard for addressing the failure torespond to admissions. A partymust satisfy thetwo-prong test. Notably, some courts have heldthat the court should not even consider whethertherewasanexcuseforfailingtorespond,andthatdenying leave because therewas no good excusefor the failure to timely respondwas an abuse ofdiscretion.35Ontheotherhand,othercourtshaverefusedarequestforleavetoamendwhennogoodreason for the failure was provided. Thus, treatany excuse for failing to respond as an unwrittenthird prong of what is essentially an “equitable”balancingtest.Ifyouhavegoodreasons,usethemtobuttressyourtwo-prongargument.Ifthereasonsare tepid, concede and emphasize the two-prongtest and the fact that it inherently results ina fairand equitable result regardless of the reasons foranyinitialfailure.

7. Costs are awarded for proving facts that should have been admitted; not for every fact that was the subject of a request.*If you are required to prove facts that were thesubject of a request for admission, youmay seekthe costs incurred, including attorney fees, inproving those facts at trial. But as the SupremeCourt of Virginia recently made clear, requestsfor admission are not a fee-shiftingdevice, and arequest intendedmerely as a basis to award feestoaprevailingpartymaybedeemedan improperrequest.36 Instatecourt,costsandfeeswillnotbeawardediftherequestcouldbedeniedingoodfaith; i.e., thepartyhada reasonablebelief that itmightprevailonthepointattrial.37Similarly,infederal court, costs and feeswill not be awardediftherequestwasheldobjectionableor“thepartyfailingtoadmithadareasonablegroundtobelievethatitmightprevailonthematter.”38 Here again, the specificity of your requests—andtheuseoftherequeststofurtherthepurposesofnarrowingissuesoraidinginthepresentationattrial—canhelp.Broadrequestsoverdisputedfactslikelywillnotleadtoanawardofcosts.Butspecific,properly drafted requests set up the potential forsuccessfulfeeawards.Onefederalcourtofappeals,forexample,heldthatitwasanabuseofdiscretionforadistrictcourttodeclinetoawardfeesandcostsinacaseinvolvingtheallegedimproperdisclosureofconfidentialinformation.Eventhoughtherewasa legitimate dispute over whether a bank “used”certainconfidentialinformationandthebankcouldhave reasonably believed that it could prevail onthatmatter,therequestwaslimitedtowhetherthebank “referred to” the information, which shouldhavebeenadmittedasundisputed.398. Use requests for admissions to assist in E-discovery.Finally,afewtipsandremindersforusingrequestsfor admissions with electronic evidence. Weall spend a lot of time gathering and reviewingE-discovery.Well-draftedrequestsforadmissions

11


helptostreamlinethepresentationofE-discovery.Likewise, ifmattersarenotadmitted, thecost forproving those facts can be significant if a thirdpartyITspecialistisrequiredtolayfoundationstoestablishtheadmissibilityofE-documentsorotherevidence,e.g.,thecontentordisplayofweb-pagesatparticulartimes. So consider using requests for admissions toaddressandconfirm:

• Theemailaddressofkeyparties;• Theauthenticityofemailprintouts;• Thefactthatparticularemailswere (1)sentor(2)receivedbyaparty;• Theauthenticityofwebsitescreenshots;• Theauthenticityofpostingsinsocial mediasitesortweetsandblogs.

Theuseofrequestsforadmissionsneednotbelimitedtomerelyquestionsofauthenticity,however.Carefullydraftedrequestscanaddressmatterssuchaswhetherparticularemailsweredeleted;whetherdriveswere scrubbed;whether filesweredeleted,altered,ordownloadedtoportablestoragedevices;andwhether particular programswere present oncomputers. Some of these requestsmay need toawait a forensic examination. And, as a tacticalmatter, youmay prefer to have an expert explaineverything.Butdon’toverlookthepossibleimpactofastreamlinedapproachontheseissuesaswell,orthebenefitofhavingaconclusiveadmission.F

*Editor’sNote:AsummaryofthePiney Meeting House Investments case,discussed innote36andaccompanying text, appears at page 22 of thisnewsletter.

EndnoTES1. Shaheen v. County of Mathews,265Va.462,473,n.6(2003).2. VirginiaSupremeCourtRule3:20authorizessummaryjudgmentbasedontheadmissionsintheproceedings.Summaryjudgmentmaybeelusive,evenwhenbasedonconclusivefacts.3. Va. Sup. Ct. R.4:11;Fed. R. CiV. p.36.4. Perez v. Miami-Dade County,297F.3d1255,1258(11thCir.2002).Piney Meeting House Investments, Inc. v Hart, ___ Va.___,RecordNo.111548(June7,2012)(requestseekingadmissionthatpartyhadnodefensestoclaimswasanimproperrequestunderRule4:11andcouldnotbeusedasbasisforawardofattorney’sfees).See also5. Shaheen,265Va.at475(quotingPerez,297F.3dat1255).6. See Lebo v.Marchetti,79Va.Cir.702(2008)(requestsondetailedfactsthatdonotnarrowissuesdeemedburdensome);Walker v. BonSecours Health Sys., Inc.,56Va.Cir.532(2001);Myers v. Brunk,57Va.Cir.474(2000).7. T. Rowe Price Small-Cap Fund, Inc. v. Oppenheimer & Co., Inc.,174F.R.D.38,42(S.D.N.Y.1997).8. Lebo,79Va.Cir.at702;Brothers v. Rockingham Mem. Hosp.,75Va.Cir.85(2008)(requestsservedforforcingelectionofremediesnotproper).9. Diederich v. Dept. of the Army,132F.R.D.614,619(S.D.N.Y.1990).10. Id.11. Dubin v. E.F. Hutton Group, Inc.,125F.R.D.372,375-76(S.D.N.Y.1989).12. Erie Ins. Exch. v. Jones,236Va.10,14(1988).13. Dubin,125F.R.D.at375.14. Harris v. Oil Reclaiming Co., Ltd.,190F.R.D.674,678(D.Kan.1999).15. Diederich,132F.R.D.at621;see also Erie Ins. Exch.,236Va.at14(requeststiedtoerroneouspremiseproperlydeniedwithoutneedtomakepartialadmissions).16. Golden Valley Microwave Foods, Inc. v. Weaver Popcorn Co., Inc.130F.R.D.92(N.D.Ind.1990);Kosta v. Connally,709F.Supp.592,594(E.D.Pa.1989).17. Lakehead Pipe Line Co., Inc. v. American Home Assurance Co.,177F.R.D.454,458(D.Minn.1997).18. See Reliance Ins. Co. v. Marathon LeTourneau Co., 152F.R.D.524,n.2(S.D.W.Va.1994); See Playboy Enter., Inc. v. Welles, 60F.Supp.2d1050(1999) (admissionregardingwhetherplaintiffindefamationcaseisapublicfigureimproperlyseeksadmissiononquestionoflaw).19. Disability Rights Council of Greater Washington v. Washington Metropolitan Area Transit Authority,234F.R.D.1(D.D.C.2006).20. Sigmund v. Starwood Urban Retail VI, LLC,236F.R.D.43(D.D.C.2006);Booth Oil Site Admin. Group v. Safety-Kleen Corp.,194F.R.D.76(W.D.N.Y.2000).21. Miller v. Holzmann,240F.R.D.1(D.D.C.2006).

12


How to Advise Your Corporate

Clients Through the Wonderful World

of E-discovery – An In-House Perspective

By Jeffrey L. Stredler

Jeffrey L. Stredler is a Senior Vice President and is in the Legal Department of Amerigroup Corporation in Virginia Beach.

I. Introduction.Thecostsandrisksassociatedwithelectronicdis-covery are significant concerns for businesses ofall sizes. It isno secret thatmost companies cre-ate,distribute,receive,andstoretheirinformationandcriticaldataelectronically.Dependinguponthesizeandstructureofanorganization,electronicallystored information (ESI) such as e-mail, instantmessages,voicemail,faxes,spreadsheets,databas-es, calendars, presentations, website information,photos,andsocial-mediaplatformsmaybefoundin hundreds, if not thousands, of possible loca-tionswithinanorganization.Astechnologyrapidlychangesandtransformsoursociety,thevolumeofESIcontinuestogrowatanexplosiverate.Forex-ample,asyouarereadingthissentencerightnow,muchof that information ismigratingup into thecloud. In the Summer 2011 edition of LitigationNews,MichaelBeverlywrote a very informativearticleregardingtheproceduralrulesapplicabletoelectronic discovery and ESI. The following aresomepractical tips tohelpyouadviseyourclientthroughtheelectronicdiscoveryprocess.Althoughnosingleapproachtoe-discoveryisappropriateforeverycase,assistingyourclientwithproperplan-

22. Va. Sup. Ct. R.4:11(a);Fed. R. CiV. p.36(a)(6).23. Lakehead Pipe Line Co., Inc.,177F.R.D.at454.24. Harris,190F.R.D.at678;Wanke v. Lynn’s Transp. Co.,836F.Supp.587(N.D.Ind.1993).25. Ausefuldiscussionofaparty’sdutiesinrespondingandthescopeofreasonableinquirycanbefoundinT. Rowe Price Small-Cap Fund, Inc.,174F.R.D.at42.26. Miller,240F.R.D.at1;Henry v. Champlain Indus., Inc.,212F.R.D.73(S.D.N.Y.2003);Diederich,132F.R.D.at619-20.27. Miller,240F.R.D.at4.28. InRe Fisherman’s Wharf Fillet, Inc.83F.Supp.2d651,661(E.D.Va.1999).29. Va. Sup. Ct. R.4:11(b);Fed. R. CiV. p.36(b).30. Shaheen, 265Va.at474(adoptingfederal“two-prong”testforpurposesofRule4:11).31. U.S. v. Branella,972F.Supp.294,301(D.N.J.1997);Eckell v. Borbidge,114B.R.63,66(Bankr.E.D.Pa.1990).32. Shaheen, 265Va.at474.33. Id. (quotingSmith v. First Nat’l Bank,837F.2d1575,1577(11thCir.1988)).34. Shaheen,265Va.at474(quotingBrook Village North Assoc., v. General Elec. Co., 686F.2d66,70(1stCir.1972)).35. Perez,297F.3dat1265-66.AndinSheehan,oneoftheargumentsadvancedwasthatthepartythatfailedtorespondneverofferedanexcuseforthatfailure.TheCourtdidnotaddresstheargumentbutfocusedsolelyonthetwo-prongtest.36. Piney Meeting House Investments, Inc. v Hart, ___ Va.___,RecordNo.111548(June7,2012)(requestseekingadmissionthatpartyhadnodefensestoclaimswasanimproperrequestunderRule4:11andcouldnotbeusedasbasisforawardofattorney’sfees).37. Erie Ins. Exch.,236Va.at14.38. Fed. R. CiV. p.37(c)(2).39. Foster Poultry Farms, Inc. v. Suntrust Bank, 377 Fed.Appx.665(9thCir.2010).TheCourtalsohelditwasanabuseof discretion not to award fees for failing to admit that thebankwasnotaholderofanotewhenthedenialwasbasedonan attorney’s opinion given twoyears before the requestwasservedandthebankdidnotfollow-upwithreasonableinquiryatthetimeoftherequest.F

13


ningandexecutionwillhelpeffectuateasuccessful,efficientandcost-effectiveprocess.

II. do not Assume that Your Client Knows What to do With Respect to Electronic discovery.Therules,courtdecisions,andotherlegalauthoritygoverninge-discoverypreservationandproductionvary depending upon jurisdiction. Outside coun-sel shouldalwaysbediligentwhenadvising theirclientsaboutthestepstheyneedtotaketocomplywithapplicablee-discoveryrequirements.Whetheryou are communicatingwith in-house counsel ordirectlywithotheremployees,donotassumethatyourclientknowsallofthecurrentrulesthatapplyto e-discovery in theparticular jurisdictionwhereitscaseispending. Evenbeforethefilingofalawsuit,youshouldcounselyourexistingcorporateclientstohelpthemprepare for thee-discoveryprocess.For example,someclientsmaynotknowthateventsthattriggerthedutytopreserve—and,thus,thedutytoimple-mentalegalhold—mayactuallyprecedethereceiptofapleading.Examplesmayincludethereceiptofademandletter,subpoenaoranoticeofaclaim.Aclientmayalsonotrealizethatthedutytopreserveinformationalsoapplieswhenit isaplaintiff inalawsuit orwhen it is the subject of an audit or agovernment investigation.Clientsneed tobeedu-cated on these issues to avoid possible spoliationof evidence and the consequences that can resulttherefrom. Youshouldmeetwith those individualswhowill play a key role in your client’s e-discoveryprocess andworkwith them to implement a reli-able and defensible process. In large companies,that will include not only in-house attorneys butalsoemployeeswhowork in information technol-ogy, compliance, data privacy, human resources,andrecordsmanagement.Insmallerorganizations,theaudiencemaybequitedifferent.Thekeyistothoroughlyunderstandyourclient’sbusinessopera-tions, company culture, and theways your clientstoresandmaintainsitsrecordsandinformation.

It is of critical importance that you informyourclientoftheconsequencesthatcanresultfromfailingtocomplywiththedutytopreserverelevantinformation.Ithasbecomealltoocommontoreadnewsarticlesandcourtopinionsinvolvingbothin-tentional and inadvertent evidence spoliation anddiscoverysanctions.Ifthecourtinwhichamatterispendinghaslocalrulesregardinge-discoveryorapilotprojectgoverninge-discoveryprocedures,youneedtomakesureyourclientisawareofthosere-quirements.Forexample,theUnitedStatesCourtofAppealsfortheSeventhCircuit,theUnitedStatesCourtofAppealsfortheFederalCircuit,andFed-eralCourts inNewYork,Maryland,Florida,Del-aware and others have all implemented standardsor standing orders governing e-discovery in cer-taincases.Federalandstatecourtsthroughoutthecountrycontinuetoadoptnewstandards,protocols,andmodelordersaimedspecificallyate-discovery.Most of these programs and orders recognize thechallenges inherent in e-discovery and emphasizethegoalsofreducinge-discoverycostsandincreas-ing communication and cooperation among trialcounsel. Effectiveclientcommunicationand tak-inganactiveroleinthee-discoveryplanningproc-esswillhelpdiminishthelikelihoodthatyourclientwillbehitwithmonetarysanctions,anadverse-in-ferenceinstruction,orotherrulingsdetrimental tothemeritsofitscase.

III. Know Your Client’s Records and Information Management System.Most corporate information is created and storedelectronically. Thus, inorder foryou toproperlyadviseyourclientinconnectionwithitse-discov-eryobligations,youneedtounderstandwhereyourclient’s business records are stored, how its com-puter systems operate, how its records are main-tained,andthecostsassociatedwiththecollectionandpreservationofdatafromeachsource.Whiletheconceptsofe-discoveryandlitigationseemtogo hand-in-hand, companies are becoming moreaware that e-discovery is a small part of a largerpicture—dataand informationgovernance.As the

14


volume of information grows within companies,manyofthemaredevotingmoreresourcestotheirrecordsandinformationmanagementprograms.Ifyouor someone inyourfirm isknowledgeable inthisfield,youshouldconsideroffering toprovideguidanceinthisarea,particularlyifyouareabletohelptheclientintegrateitse-discoveryproceduresintoitslargerinformation-managementprogram.Itiscriticalthatthesetwoareasworkwelltogether. By having this knowledge, youwill be abletohelpyour client prepare for thedocumentpro-ductionrequest thatwill inevitablyarriveatsomeunforeseenandinconvenienttimeinthefuture.Aswithmanyprojects,preparationiskey,andhavingaplaninplaceforpreservingandproducingrecordssubjecttoalegalholdwillhelpyourclienthandleits e-discovery responsibilities more productivelyandefficiently.

IV. Advise Your Client What Steps need to be Taken to Properly Preserve Information Subject to a Legal Hold and Help Your Client Improve its Legal-Hold Process.Donotassumethatyourclientknowswhattopre-serveorhowtoproperlypreserveinformationthatissubjecttoalegalhold.Ifyouareawareofasitu-ation thathasarisen thatrequires thepreservationofESI,youshouldataminimumoffertodraftthelegal-holdnoticethatyourclientwillbedistributingthroughoutitsorganization.Ifyourclientdeclinesthatoffer,youshouldasktoreviewthelegalholdbeforeitisdistributedtoensurethatitwillaccom-plishitsintendedpurposeandwillbedefensibleincourt.Youshouldalsoaskforalistofthecustodi-answhowillbereceivingthehold,andremindyourclientthatthelistmightneedtobeamendedorsup-plementedas thecaseprogresses.Since sanctionshave been imposed on both clients and attorneysas a result of insufficient legal-hold notifications,youhaveavested interest,asdoesyourclient, inmakingsurethatrelevantinformationispreservedandultimatelyproduced.Youmaywanttoconsideraddingaparagraphortwoaboutpreservationobli-

gationsande-discoveryinyourengagementlettertoyourclient. Youshouldtakeanactiveroleinadvisingyourclient as to how to properly preserve informationsubjecttoalegalhold.Youshouldinteractnotonlywithin-housecounselbutalsotheITpersonnelandotherkeyemployeeswhowillbeplayingaroleinthis process.Your client needs to understand thatrelevantinformationneedstobepreservedandmaybediscoverableregardlessofhowthatinformationis generated or where that information is stored.Manyemployeesmaynothaveanyexperiencewiththelegalsystemandmaynotunderstandthatane-mailcanbearecordsubjecttopreservationifitisrelevanttoalawsuit. Youshouldalsoaddressthesubjectofdepart-ing and former employees with your client. Youmayneedtopreserveinformationthatwascreatedorpossessedbyformeremployeesforaparticularmatter, aswell as current employees subject to alegalholdwho leave theorganizationprior to thereleaseof thehold.Ifakeycustodianhasleft theorganization,youshouldinvestigatehowthatper-son’sdatawasdisposedofuponhisorherdepar-ture,asyouwillneedtoknowwhethertherecordswere destroyed, saved, or transferred to anotheremployee.You should alsomake sure your clienthasproceduresinplacetoensurethatrecordsinthecustodyofdepartingemployees subject toa legalholdarepreservedafterdeparture. Similarly,youshouldadviseyourclienttohaveaprocessinplacetomonitor the repairor replacementofa relevantcustodian’scomputerorotherdevicetoensurenorelevantinformationislost. Asyouguideyourclients through the legal-hold process, take note of ways that your clientcan improve not only its legal-hold process butalso its entire e-discovery process, and help yourclient develop best practices for those processes.This covers everything fromyour client’s recordsandinformation-managementprogram,itspoliciesandproceduresfore-mailusageandretention,newtechnologies, legal-hold audits and releases, andsoftwaresolutionsthathelpyourclientcomplywith

15

Summer2012 LitigationNews

e-discoverylegalrequirements.

V. Be Cost Effective and Understand the Role of Technology.Theburdensandcostsarisingoutofthepreserva-tionandproductionofESIcanbesubstantial.Justasyouwouldgivecarefulconsideration tomeritsstrategyattheoutsetofacase,youshouldalsofo-cusone-discoverystrategyandthetechnologythatiscurrentlyavailable to reduce thatexpenseatanearlystageofthecase. Even with all of the techno-logicaladvances,oldfashionedco-operationamongcounselisalwaysanimportantkeytohandlinge-dis-covery in an efficientmanner.Al-mostallof thecourtopinionsper-taining to e-discovery emphasizethat cooperation and transparencyplayaveryimportantroleinthee-discovery process.The concept ofproportionality has gained a greatdeal ofmomentum in the last fewyears in most jurisdictions. Thisconcept,whichderivesfromRule26oftheFederalRules of Civil Procedure, Supreme Court ofVir-giniaRule4(1)(b)(1),4(1)(b)(7),andsimilarstaterules,providesamechanismwherebythevalueofinformationisweighedagainsttheburdenoffind-ingandproducingit.Iftheburdenoutweighsthevalue,itoftendoesnotneedtobeproduced.Courtshaverecognizedtheimportanceofproportionalityine-discoveryandalthough thereappears tobealackofuniformagreementamongthecourtsregard-ingtheapplicationofproportionalitytoe-discoveryissues,youneedtobefamiliarwithhowthecourthearing your client’s casewill view and treat theconceptof proportionality.Somecourtshave evi-dencedstrongsupportforapplyingproportionalitytopreservationissues,whileothershavenotbeenasreceptive.1Dependinguponthenatureofthecase,thiscanamounttoconsiderableadditionaldiscov-ery expense.You should use themeet-and-conferprocess tobecreativeand toworkwithopposing

counseltoreducetheburdenofe-discoveryonallpartiesinvolvedinthelitigation.Boththecourtandyourclientswillappreciateyourefforts. Onewaytoreducethecostandburdenofe-discovery is todevelop targeted and iterativedis-coveryprotocolsat thestartof thecase. Youcanalsoreducetheburdenofe-discoverybyknowinghow to use search-and-review protocols that em-ploymodern technology. This technology can beusednotonlytoreduceexpensesbutalsotoprotectprivilegedandsensitivebusinessinformation.You

canusee-discoverytoolstoreducetheburdenandexpenseofprivilegelogs.Forexample,anumberofe-discoverytoolscancreateandpre-pare a detailed privilege log froma document’smetadata. But evenwiththistechnology,carefulatten-tion should be paid to ensure thatprivilege logs comply with appli-cable rules and present sufficientinformation to provide a basis forassertingtheprivilege. Courtsareincreasingly critical of improper

privilegelogs,andawaiveroftheprivilegecanre-sultifalogisdeficient.2 Alongthesesamelines,youshouldconsideradvisingyourclientwithregardtoitsselectionanduse of e-discovery software and vendors. If youare using a vendor to assistwith e-discovery, of-fertohelpyourclienttonegotiatefavorableprices,particularlyhostingandstoragecharges,aswellasdata-disposalorreturnfees.Therearemanye-dis-coveryvendorswithwidelyvaryingskillsetsandtechnology. It is important for you to be familiarwiththerelativestrengthsofthesevendorsinordertoprovidesoundguidancetoyourclient. There have been many innovations in thedocument-reviewprocessover thepastfewyears.Although technological advances have helpedcausetheexplosionindatacreationandpreserva-tion, technologyalsocanbeused tohelp reign insomeofthecostsassociatedwithe-discovery.Youorsomeoneonyourlegalteamshouldbeasknowl-

Even with all of the

technological advances,

old fashioned cooperation

among counsel is always

an important key to

handling e-discovery in an

efficient manner.

16


edgeableaboutthatsubjectasyouarewiththeun-derlyingmeritsofthecase,becauseafailuretobeknowledgeableinthatareacanresultinadditionalunnecessaryexpenseandinconveniencetoyourcli-ent.Ifyouareabletocreatesavingsforyourclientbynegotiatingwithvendorsorutilizingtechnology,makesureyoutellyourclientaboutthoseefforts–theywillbegreatlyappreciated. Finally,ifyourclienthasinsurancecoverage,youshoulddetermineearlyinthecasewhethere-discoverycosts fallwithin the scopeof coverage.Ifthereiscoverage,youshouldcommunicatewiththecarrieratthestartofthecasetoensurethattherearenosurprisesordisagreementswheninvoicesaresubmittedforpayment.

VI. Stay Apprised of new developments in the Law.As technology changes, so does the law. Manycourts,attorneys,andclientshavewitnessedfirst-hand the continuing evolution of e-discovery aswell as the complexities and costs related to thepreservationandproductionof electronic records.Social-mediaplatformssuchasFacebook,Linked-In and Twitter have exploded in popularity withbothindividualsandbusinesses.Therapidgrowthofcloudcomputinghasgivenbirthtoawholenewarrayofe-discoveryandotherlegalissues.Depend-inguponthesubjectmatterofanygivencase,yourcomprehensiveunderstandingof thesetechnologi-caldevelopmentsmaybecrucial inadvisingyourclients in e-discoverymatters. For example, withcloudcomputing,issuessuchasdatasecurity,dataprivacy,data location,metadata,data access,pro-ductioncosts,anddisasterrecoveryallmayatsomepointintimeplayaroleinyoure-discoveryefforts. Earlier this year, Magistrate Judge AndrewPeck of the United States District Court for theSouthernDistrictofNewYorkissuedwhathasbeendescribedasthefirstjudicialopinionapprovingtheuse of predictive coding.3 In his opinion, JudgePecknoted“[w]hattheBarshouldtakeawayfromthisOpinionisthatcomputer-assistedreviewisanavailable tool and should be seriously considered

for use in large-data-volume cases where it maysave the producingparty (or bothparties) signifi-cantamountsof legal fees indocument review.”4ForthereasonsJudgePecknotesinhisopinion,itis important for counsel to understand how thesedevelopments in the lawimpact thecasesyouarehandlingforyourclients. Clientspayagreatdealofattentiontoe-dis-covery costs, so you should also stay apprised ofany legal authority that provides for the recoveryof e-discovery costs arising out of litigation. Inaccordance with Federal Rule of Civil Procedure54(d)and28U.S.C.§1920,aprevailingparty incivil litigationmaypursue the recoveryofcertaincostsfromthenon-prevailingparty,althoughthereappearstobeasplitofauthorityastowhethersuchcostsarecoveredbytheaforementionedcodesec-tion.5Ifyouarerepresentingaclientinalitigationmatter,youneedtoadviseyourclientattheoutsetof the case about the potential for recovering (orpaying)e-discoverycostssothatyourclientisnotmadeawareofthisissueforthefirsttimeatthecon-clusionofthecase.

VII. Conclusion.The cost, time, labor, and potential sanctions as-sociated with e-discovery can present significantchallengesforyourclients,butcarefulplanningandthoughtful guidance can limit the inconvenience,risk,andexpense to them.Yourability toeducateandadviseyourclient,andtomanagetheprocessproperlyandefficiently,willmatteragreatdealtoyour client. It is critical that attorneys be knowl-edgeable when it comes to their client’s recordsandinformation-managementsystems,aswell thelaw applicable to each case. In representing yourcorporate clients, you should always be thinkingaboutwaystohelpthemimprovetheirrecordsandinformation-managementprogramsandtheirlegal-holdprocesses,assistthemwithselectingreputablee-discoveryserviceproviderstoassistasappropri-atewithe-discoverysolutions,andcontinuallyseekcost-effectiveapproachestoe-discovery.Notonlywillthisresultinasatisfiedclient,butitwillalso

17


provideyouwithnumerousopportunitiestodevel-opnewbusinessandrelationshipswithyourexist-ingclientbase.F

EndnoTES1. Pippins v. KPMG, LLP,2011WL4701849(S.D.N.Y.2011)(defendant’smotionforprotectiveordertolimitthescopeofitspreservationobligationsdeniedanddefendantrequiredtospend,accordingtoitsownestimates,inexcessof$1,000,000topreservecomputerharddrives).2.ePlus, Inc. v. Lawson Software, Inc.,2012U.S.Dist.LEXIS21636(E.D.Va.Feb.21,2012)(defendantwaivedprivilegeoversubjectmattercontainedinhundredsofdocumentsthatwereimproperlylogged).3.Predictivecodinggenerallyreferstotheprocessofusinga“seedset”ofdocumentsknowntoberesponsivetoidentifydocumentssimilartothemincontent.Severale-discoveryven-dorsclaimtoprovidethistechnology,buttheirefficacyvarieswidely.4.Da Silva Moore v. Publicis Group,No.11-CV-1279(S.D.N.Y.Feb.25,2012),adopted by district court,2012WL1446534(S.D.N.Y.Apr.26,2012).InarecentVirginiastate-courtcase,Global Aerospace, Inc. v. Landow Aviation, L.P.,CLNo.61040(LoudounCountyApril23,2012),LoudounCountyCircuitCourtJudgeJamesChamblinissuedanorderallowingdefendantstousepredictivecodingprocessandproduceESIdespiteplaintiffs’objectionstotheuseofthisprocess.5.Mann v. Heckler & Koch Defense, Inc.,2011U.S.Dist.LEXIS46045(E.D.Va.Apr.28,2011)(allowingrecoveryofsometaxablecostsbutdecliningtotaxcostsforcreationofadatabase);Fells v. Virginia Dept. of Transp.,605F.Supp.2d740,743(E.D.Va.2009(decliningtotax“electronicrecordsinitialprocessing,Metadataextraction,[and]fileconversion”)(internalquotationmarksomitted);Francisco v. Verizon South, Inc.,272F.R.D.436,446(E.D.Va.2011)(prevailingpartydidnotmeetitsburdenofsupportingitsrequestforreimbursementofcostsfortheprocessing,storageandproductionofESI);Race Tires of America, Inc. v. Hoosier Racing Tire Corp.,2012WL887593(3dCir.Mar.16,2012)(vacatingtrialcourt’sawardof$367,400ine-discoverycoststoprevailingpartyandreduc-ingamountoftaxablecoststo$30,370.42);Lockheed Martin Idaho Techs. Co. v. Lockheed Martin Advanced Envtl. Sys.,U.S.Dist.LEXIS52242at*8(D.Idaho2006)(awardingcostsforalitigationdatabasethat“wasnecessaryduetotheextremecomplexityofthiscaseandthemillionsofdocumentsthathadtobeorganized.”);In re Aspartame Antitrust Litig.,2011WL4793239(E.D.Pa.Oct.5,2011)(awardingcostsforthecreationofalitigationdatabase,datastorage,keywordsearches,harddriveimaging,de-duplication,dataextraction,processingandothertasksrelatedtoe-discovery);Jardin v. DATAllegro, Inc.,2011WL4835742(S.D.Cal.Oct.12,2011)(awardingcostsfore-discoveryexpensesinvolvingprojectmanagement,dataprocessingandconversiontoTIFFformat).

Make it Simple! Preparing an Argument for Trial Court

By Leslie L. Lilley

Judge, Second Judicial Circuit

Simplemeans“plain,basic,oruncomplicatedinform,nature,ordesign;withoutmuchdecorationorornamentation.”1 LeonardoDaVinci likedsimple.Heproclaimedthat“simplicityistheultimatesophis-tication.”Inamoderncontext,SteveJobs,adoptedDaVinci’squote inmarketingAppleproducts, andadded, “[i]t takes a lot of hardwork . . . tomakesomething simple, to truly understand the underly-ingchallengesandcomeupwithelegantsolutions.”2Apple’s chief designer, Jonathan Ive, amplified themantrainexplaining,“[simplicity]involvesdiggingthroughthedepthofthecomplexity.”3 Simple ishard,but simple is effective. Whileit is impossible to know what sways a judge,4 aconcise, well-organized, and well-supported oralargument—one that digs through the depth of thecomplexity and resolves into a simple deductiveconclusion—is themost effective tool of the triallawyer.Soundsgood,buthowdoyouprepareandmakeeffectiveuseofthistoolbeforeatrialjudge?

Analyze and know your forum. Knowthecourtroom set-up and decide how best topresent your argument in that forum. Youmustdecidewheretostand,wheretodisplaydemonstrative exhibits, what technology touseandhowtouseit.Ifyouarevisitinganunfamiliarcourthouse, talk to thebailiffandtheclerktounderstand“howthingsaredone.”Touseanoldpoliticalaxiom,knowtheshapeofthetable.

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Be familiar with the Court’s process.Eachjurisdiction is different in some way. Youmustknowthelocalrulesandprocedures.Ifthereisnoapplicablerule,whatisconsideredgoodpracticeintheparticularcourt,orwhatispreferredbythejudge?Youshouldneverleavesuchimportantdetailstochance.Dis-covering that information is fairly easy andonly requires a well-placed telephone call. For example, is a brief sup-porting the motion requiredor expected? Will the judgesee the trial brief before thehearing?Howcanyougetthebrieftothejudgebeforethear-gument?Youmustalsoknowhowmuch timeyouhave fortheargument,whetherat trialoronamotion,andyoumustrespect that limitation. Or-chestrating the presentationsets the tone for your argu-mentandfailing tofollowtherulesor localpracticetellsthejudgevolumesaboutyou.

Present authority for your position. Youmusthaveauthorityforyourposition.Everyjudgewantstomaketherightdecisionandis“hungry”fortheprecedentthatleadstoreso-lutionoftheissue.Neverapproachorleavean argumentwith the need for the judge tofind additional authorities to make a deci-sion.Whetherinasupportingbrieforintheargument,youshoulddirectthejudgetotheparticular aspects of a cited case thatmakeit an applicable authority. This is a funda-mentalstepthatshouldnotbeskipped.Itisnotpracticaltoexpectthejudgetoreadandanalyzetheprecedentialvalueofanauthorityduringtheargument.Thejudgeisreallynotinterestedindoingyourjob!Ithappensfre-quently,it’snotfairtothejudge,anditleavestoomuchtochanceifyoucareaboutmakinganeffectiveargument.Whenajudgerequests

authority for a requested action, never relyupon“that’sthewayit’salwaysdone”assup-portforyourposition.Worse,neverrespondwith,“that’sthewaytheotherjudgesdoit.”Ialwayswonderwhichlawschool“teaches”that response! It reallyhappensmoreoftenthanyoucanimagine. Lastly,don’tassumethat the judge knows the authority for yourposition, nomatter how routine the issue is

to you. Even for the mostroutineissues,makesureyouknowandcitetheauthority.

Briefs can help!Ifyouhavedecided tofileabrief,or ifabrief is required or expected,focus on how your brief canassistthetrialjudgeinunder-standing your argument andagreeingwithyou. It should“walk”thejudgethroughyourargument in a deductive for-

matandmustbeconcise,well-organized,re-searched,editedandyes,simple.Sometimesanoutlineorbulletformat isabettermeanstocommunicateyourmessagethanthetradi-tionalbriefformat.Ifeffectivelyprepared—and that includes the format and the head-ers—the brief is a valuable reminder to thejudgeof thefactsandauthoritiessupportingyourargument.Editingisanimportantskillthatmayfrustrateyourlegalassistantbutwillpaydividendsinformulatinganeffectivesup-portingbrief.Mostoften,atwentypagebrief(albeitpermittedbytherules)sendsthemes-sage that the attorney has not spent enoughtime thinkingabout the issuesandsolutionstohavemoldeditintoasimpledeductivear-gument.Moreover,youshouldwonderifthejudgewouldhavethetimetoreadthatbrief.Leave the appellate brief for the appellatecourt.

Use a building blocks argument.Yourgoal

Every judge wants to make the

right decision and is “hungry”

for the precedent that leads

to resolution of the issue.

never approach or leave an

argument with the need for

the judge to find additional

authorities to make a decision.

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is to get the judge to “yes.” The most ef-fectivewaytodosoistopresentabuildingblocksorstep-by-stepargument(ifAthenB,ifBthenC...)thatincorporatestheauthor-ity foryourpositionandconcludeswith thesolutiontotheissue.Neverriskyourcasebymaking abstract arguments that thedecisionmakermay not follow or be able to under-stand. Choose your issueswisely and stickwith them. The scattershot argument com-municatesthatyouarenotconfidentinyourpositionandconfusestheissue.5Alternativeargumentsmaybenecessary,buttheyshouldbelimitedandwell-supported.Ifexhibitsordiagramswould assist in explaining a com-plexscenario, thenpreparethemtosimplifytheissueorfactpattern.Donotfallintotheoldbeliefthatdemonstrativeexhibitsareonlyforjuries.Theultimategoalistopresentanargument to the judgethat ties thefactsandissues together andpresents a concise, logi-cal,andsupportedconclusion.

Put yourself in the judge’s position. Pre-pare your argument from the perspectiveof what you would need to make the deci-sion in thiscase. Remember theforum, thecourt’sprocess,timelimitations,andeventhenumberofcasesthejudgemighthearinaday,aswellasthejudge’sdesiretodecidethecase“from the bench.” Trial judges hear casesevery day. There typically are no “readingdays,”so the trial judgewants todecide thematterfromthebenchifpossible toavoidabacklogofcases.Rememberthisisyourcaseandyouhave“lived”withitpriortotheargu-ment, sometimes forextendedperiods. Thejudgemayhavejustseenthefileforthefirsttimeas theargumentbegins. Don’tassumethejudgehasreadyourbrief,andevenifthejudgehasreadthebrief,don’tassumethatheorsheremembersyourkeypoints.Routinelysummarizethefactsandtheissuessuccinctly.Winningthecasemeanssimplifyingthecom-

plexitiesandpresentingadeductiveandwell-supportedargumentthatpersuadesthejudgetoagreewithyou.Goodlawyersdon’tleavethatprocesstochance.

never be distracted by your opponent. Keepyourfocusonthedecisionmaker,always.Ifyouareinterruptedbyopposingcounsel,askthejudgeforassistance.Neverbeluredintoaverbalexchangewithopposingcounseldur-ingyourargument. Thatexchange,whethermeritedornot,canneverhelpandoftenhurtsyourargument. It isimportanttoremembertostayonpoint.

Someofthesepointsarebasic,butit’simportanttorevisitthem.Attimes,whetherbroughtonbyfa-tigue,frustration,lackoftime,ortheinsistenceofclients,wetendtoforgetthebasics,takeshortcuts,orabandonourtraining.Asthosecircumstancesre-peatthemselves,wedevelopbadhabitsandneedtoberemindedthatthebasictechniquesarethekeystosuccess.Inthefootballvernacular,allthecom-plexities of the sport boil down to “blocking andtackling.”6Revisitandpracticeyourbasicsinpre-paringanargument,andforthebenefitofyourcaseandthejudge,“makeitsimple.”F

EndnoTES1. Oxford University Press (2012): http://oxforddictionaries.com/definition/simple?region=us&q=simple2.WalterIsaacson,SteveJobs343(2011).3.Id.4.JeffShesol,SupremePower:FranklinRooseveltvs.theSu-premeCourt524(2010).5.ForaviewfromtheCourtofAppeals,see Griffin v. Griffin, 2012Va.App.LEXIS179(Va.Ct.App.May29,2012).6.ExcerptedfromquoteattributedtoVinceLombardi

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Evidence Corner • Kristine H. Smith

Can a defendant introduce medical records without testimony by the health care provider? Yes, in certain circumstances. VirginiaCodeSection16.1-88.2providesthat,inacivilsuittriedinGeneralDistrictCourtorappealedtotheCircuitCourt by a defendant, either party can introducemedicalrecordsandinvoicesuponcompliancewiththestatute’s requirements. Thestatute requiresaswornstatementfromtheproviderthatthepersonnamedwas treated or examined by the provider,thattheinformationintherecordsistrue,accurate,and fully descriptive of the nature and extent ofthe person’s injuries, and that the statement ofcosts is true and accurate. In addition, Section18.1-88.2requiresthepartyintendingtointroducethe recordsandaffidavit toprovidecopiesof therecordsandwrittennoticeofintenttointroducetherecordstendaysinadvanceofthetrial.

In a personal-injury action, can a plaintiff testify that he did not seek additional treatment because he lacked health insurance? No. The collateral-source rule prohibitsintroductionofevidenceregarding“compensationorindemnityreceivedbyatortvictimfromasourcecollateral to the tortfeasor.” Shilling v. Aspinall,235 Va. 472, 474, 369 S.E.2d 172, 174 (1988).InstructionNumber 9.015 of the VirginiaModelJuryInstructions–Civilstatesthat“[t]hepresenceor absence of insurance or benefits of any type,whether liability insurance, health insurance, oremployment-relatedbenefitsforeithertheplaintifforthedefendantisnottobeconsideredbyyouinanyway...”

Is a plaintiff’s failure to wear safety lap belts and shoulder harnesses evidence of contributory negligence in a personal-injury action arising out of an automobile collision? No.VirginiaCodeSection46.2-1094requiresany driver or adult occupant riding in the frontseat of a motor vehicle to wear the appropriatesafetybeltsystem. HoweversubsectionDof thestatutespecificallyprovidesthataviolationofthisrequirement does not constitute negligence, andcannot be considered in mitigation of damages,admitted into evidence, or commented uponby counsel in any action seeking damages forinjuries arising from the operation, ownership,ormaintenanceof amotor vehicle. Therefore, aplaintiff’s failure to wear the safety-belt systemdoes not constitute evidence of contributorynegligence,andmaynotbeadmittedintoevidenceormentionedbycounsel inopening statementorclosingargument.

Can a party introduce a police accident report during the officer’s testimony in a civil or criminal trial? No.VirginiaCodeSection46.2-378prohibitsthesereportsfromadmissionintoevidenceatanycivilorcriminaltrialarisingoutofamotor-vehicleaccident.Therefore,eventhoughthepoliceofficerordeputywhorespondedtotheaccidentscenemaytestifyattrial,theaccidentreportisnotadmissibleinevidence.

Kristine H. Smith is a partner at Edmund & Williams in Lynchburg.

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Real PropertyCase: Livingston v. Va. Dep’t of Transportation, Record

No. 101006(6/7/2012)Author: MilletteLower Ct.: FairfaxCounty(Smith,RobertJ.)disposition: Reversed

Facts: AspartoftheBeltway’sconstructionintheearly1960’s,VDOTstraightened,narrowed,andrelocatedCameronRun,astreaminFairfaxCounty.Overtime,itfilledwithsilt.Thestreambackedupduringarainstormandinundatedseveralhomes.TheplaintiffhomeownerssuedVDOTforinversecon-demnation,claimingthatitsnegligenceinreroutingandmaintain-ingthestreamexacerbatedtheflooding’sseverity.Thetrialcourtsustainedthedemurrer,holdingthataone-timefloodingeventcouldnotsupportaclaimforinversecondemnation.

Ruling:Onappeal,theSCOVreversed.Itheldthatthetrialcourterredinholdingthataone-timefloodingeventcouldnotsupportaclaimofinversecondemnation.

TheSCOVrejectedtheotherdefensesthatVDOTasserted.

• Itheldthattherulingcouldnotbejustifiedonthegroundsthatthefloodingeventwasanextraordinary“actofGod.”TobeanactofGod,theeventmustbethesoleproximatecauseoftheinjury.Thehomeowners’complaint,however,clearlyallegedthathumanagencywasaproximatecauseoftheflooding.Thus,evenassumingthatapartycouldopposeanadverse-condemnationproceedingusinganact-of-Goddefense--anissuetheSCOVexpresslydidnotaddress--theallegedfactsdidnotestablishanactofGod.

• ItrejectedVDOT’sargumentthatthehomeowners--whodidnotbuyorrenttheirpropertiesuntillongafterthecontructionoftheBeltway--lackedstanding.TheSCOVnotedthatthegravamenofthehomeowners’complaintwasthatitwasVDOT’sfailuretomaintainthestream,notitsinitialconstructionoftheBeltway,thatcausedtheflooding.

• TheSCOVrejectedVDOT’sargumentthataninverse-condemnation“damage”claimmustallegethatthegov-ernmenttookaparticularintangiblepropertyright(e.g.,aneasement)fromtheowner.Althoughpreviouscasesallowedtheownertobaseaninverse-condemnationclaimontheimpairmentofanintangiblepropertyright,noneofthemrequiredthattheownershowaninjurytoanintangi-blepropertyright.TheSCOVheldthatapropertyowner

canbaseaninverse-condemnationactiononphysicaldam-agetotheproperty.

• TheSCOVrejectedVDOT’sargumentthatitwasthecounty’srapidurbanization,notthepoormaintenanceofthestream,thatcausedthepropertydamage.Itheldthatthiswasaquestionoffactproperlyreservedforthejury.

• ItrejectedVDOT’sargumentthatthehomeswerenotdamaged“forpublicuse”inasmuchastheplaintiffsdidnotallegepurposefulactionbythegovernment.TheSCOVheldthatnothinginthestateconstitution--orinSCOVprecedentapplyingit--barredahomeownerfromrecover-ingforthegovernment’sfailuretoact,ratherthanact.Agovernment’sfailuretoactcangiverisetoaconstitutionalobligationtopayjustcompensation.

• ItrejectedVDOT’sargumentthatthe“use”inquestionwasnot“public.”TheSCOVnotedthatthethestream’srelocationandnarrowingwaspartoftheBeltwayprojectandwasnecessaryforthecontinuedoperationoftheroad.

• Finally,theSCOVrejectedVDOT’sargumentthatinverse-condemnationclaimsdonotencompassdamagetopersonalproperty.Itnotedthatearliercaseshadrec-ognizedclaimsforinjuriesotherthantoland.Butitheldthat,tobecompensable,suchpropertymustbe“appurte-nant”totherealestate.

JusticesMcClanahanandGoodwyndissented.

Key Holding(s):

• Apropertyownercanbaseaninverse-condemnationclaimonaone-timefloodingevent.

• Tobean“actofGod,”thesoleproximatecauseofinjurymustbetheactofGod.

• Anownercanbaseaninverse-condemnationclaimonphysicaldamagetoproperty,notjusttheencroach-mentonintangiblepropertyrights.

• Injuriescausedbygovernmentnegligencecangiverisetoacompensableinverse-condemnationclaim.

• Apartycanbringaninverse-condemnationclaimfordamagetopersonalpropertyifthepersonalpropertyisappurtenanttorealestate.

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Recent Civil Cases from the Supreme Court of Virginia

JUnE SESSIon 2012

Case summaries are prepared by Joseph Rainsbury, Editor of Litigation News. Mr. Rainsbury is a partner in the Roanoke office of LeClairRyan.

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Civil ProcedureCase: Piney Meeting House Investments, Inc. v. Hart,

Record No. 111548(6/7/2012)Author: MimsLower Ct.: SpotsylvaniaCounty(Beck,DavidH.)disposition: Aff’dinPart,Rev’dinPart

Facts: Plaintiffshadaneasementoverdefendant’sland.Plaintiffsallegedthatthedefendanthadencroachedonthiseasementwithvariousobstacles,includinganelectricbox,generator,well,propanetank,trees,andmulch.Thedefendantadmittedthattheelectricboxandgeneratorinterferedwiththeplaintiff’suse,butdeniedthattheotheritemsdidso.

Thetrialcourtreferredthemattertoacommissioner,whofoundthattheelectricbox,thegenerator,themulch,andthetreesencroachedontheeasement,butthattheundergroundwellandpropanetankdidnot(exceptforthetank’sabove-groundcap).

Theplaintiffsfiledexceptionswiththecircuitcourt,object-ingtothefindingsregardingthewellandthetank,andarguingthattheywereentitledtoattorneysfeesbecausedefendanthaddeniedtheirrequestthatdefendant“admitthatyouhavenodefensestoPlaintiff’sclaims.”Thecircuitcourtorderedthedefendanttoremoveallobstructions--includingthewellandthepropanetank--anditawardedplaintiffsattorney’sfeesandcosts.

Ruling:TheSCOVreversedtherulingthatthedefendanthadtoremovethewellandthepropanetank.Itheldthat“theown-ersofaservientestatemaystillmakereasonableuseoflandburdenedbyaneasementofdefinitewidth.”Andanencroach-mentisnot“material”whereitneithernarrowstheeasementnorunreasonablyinterfereswithitsuse.

TheSCOValsoheldthatthetrialcourtshouldhavedeferredtothecommissioner’sfactualfinding,supportedbytheevidence,thatthewellandpropanetankdidnotencroach.

TheSCOVlikewisereversedtheattorney’sfeesaward,not-ingthatplaintiffs’requestthatdefendantadmitthatithadnodefenses“wasnotaproperdiscoveryrequestunderRule4:11”sotherewas,underRule4:12(c)(4),a“goodreason”whydefendantdidnotadmitthatithadnodefenses.

TheSCOVaffirmedthecourt-costsaward,however,astheplaintiffshadsubstantiallyprevailed.

Key Holding(s):

• Ownersofaservientestatemaymakereasonableuseofaneasementofdefinitewidth.

• Arequestforadmissionaskingthatdefendantadmitthatithad“nodefensestoPlaintiff’sclaims”isimproper,andadefendant’srefusaltoadmitthisdoesnotentitlealater-prevailingplaintifftorecoveritsattorney’sfees.

F F F

Land UseCase: Town of Leesburg v. Long Lane Assocs. Limited

Partnership, Record No. 111658(6/7/2012)Author: GoodwynLower Ct.: LoudounCounty(Brown,J.Howe)disposition: Reversed

Facts: Propertyownerfiledanactionchallengingtherezon-ingofanabuttingparcel.Thetwopropertieshadoncebeenpartofasingletract.Beforesubdividing,thepriorownerhadprofferedconditionstobeimposedontheentireproperty.Theproffersrequiredthepriorownertobuildastreetconnectingtwothoroughfares,andforbadetheownerfromusingtheparcelasaday-carecenter.

Theowneroftheabuttingparcelobtainedaspecialexceptionallowingday-careuseandremovingtherequirementthatitconstructaconnectingroad.Theownerchallengedthisspecialexception.Thecircuitcourtagreedwiththechallenge,andheldthattheownerhadavestedrightthatpreventedtheTownfromremovingtheconditionsimposedontheabuttingparcelwithouttheowner’sconsent.

Ruling:Onappeal,theSCOVreversed.ItheldthatunderCode§15.2-2307,Virginia’svestedrightsstatute,alandownercannotacquireavestedrightinaproffer.Furthermore,thestatuteonlyappliestothepropertyowner,nottoadjacentowners.

TheSCOValsoheldthatCode§15.2-2303(A)--whichstatesthatproffersremainineffectuntilasubseqentamendmentchangestheparcel’szoning--didnotsupporttheowner’sargu-ment.Itnotedthatthetownhadchangedthezoningontheadjacentparcel.Sotheprofferswereproperlyremovedfromtheneighboringparcel,eventhoughtheyremainedineffectontheowner’sparcel.Nothinginthestatuterequiresthatalltheownersofsubdividedpropertiessubjecttoaprofferagreetotherezoningofoneofthesubdividedparcels.

Key Holding(s):

• Apropertyownerdoesnothaveavestedrightinthecontinuedapplicationofproffersthatapplytoaneigh-boringparcel.

• Whereanownersubdividespropertythatissubjecttoaprofferandthenconveysthesubdividedparcelstodifferentpersons,thelocalitycanchangetheproffersononeofthesubdividedparcelswithoutfirstobtain-ingtheconsentofallownersofthesubdividedparcels.

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Local GovernmentCase: Hill v. Fairfax County School Board, Record No.

111805(6/7/2012)Author: KoontzLower Ct.: FairfaxCounty(Alden,LeslieM.)disposition: Affirmed

Facts: Beforeapublicmeetingontheissue,themembersofaschoolboardexchangedemailsabouttheclosingofanelemen-taryschool.AcitizenissuedFOIArequestsforthesecom-munications,whichsheallegedconstitutedanimproperclosedmeeting.Theschoolboardwithheldsomeofthesedocumentsandredactedothers.

Thecitizenthenbroughtamandamusclaimtocompeltheboardtorevisititsdecisiontoclosetheschool,andtoobtainthedocumentsthattheschoolboardhadwithheldfromher.Shesoughtcostsandattorney’sfeesontheFOIAclaim.

Theschoolboardultimatelyprovidedtheemails.Butthetrialcourtheldthattheback-and-forthcommunicationsintheemailsdidnotconsituteaclosedmeeting.Itdeniedtheplaintiff’srequestforattorney’sfees.

Ruling:TheSCOVaffirmed.ItnotedthatFOIAdefined“meeting”asan“assemblage.”TheSCOVheldthatthiscon-notesindividualsbeingtogetheratthesametime,whichdidnotoccurintheemails.

Theplaintiffarguedthatthemultipleemailsbackandforthwerepartofa“ongoingdiscussion,”and,assuch,possessedtherequisitesimultaneity.TheSCOVrejectedthisargument.Itcharacterizedthetrialcourt’sdecisionthatthetheemailswerenotan“assemblage”asafindingoffact.Anditfoundthatthetrialcourt’sdecisionwasnotplainlywrongorwithoutsupportintheevidence.

TheSCOValsoaffirmedthetrialcourt’sdenialofattorney’sfeesandcosts.Althoughitwastruethattheplaintiffhadsuc-cededinobtainingthe“smallnumberofdocuments”thattheboardhadwithheld,shefailedinherultimatepurpose,whichwastooverturntheboard’sdecisiontoclosetheelementaryschool.Thus,shedidnot“substantiallyprevail”andwasnotentitledtoattorney’sfees.

Key Holding(s):

• Aback-and-forthseriesofemailsdoesnotconstituteanimproperclosedmeetingunderFOIAbecausethelackofsimultaneitymeansthattheexchangedidnotconstitutean“assemblage”forFOIApurposes.

F F F

DefamationCase: Mansfield v. Bernabei, Record No. 111314(6/7/2012)Author: GoodwynLower Ct.: FairfaxCounty(Ney,R.Terrence)disposition: Affirmed

Facts: Beforefilingafederalemploymentcase,theemploy-ee’slawyermailedademandlettertotheemployer,enclosingadraftcomplaint,withtheofferofresolvingthedisputeinfor-mally.Thecomplaintallegedlycontaineddefamatorystatementsabouttheemployer’sattorney.Theemployer’sattorneybroughtadefamationactionagainsttheemployeeandtheemployee’slawyer.

Thetrialcourtheldthatthedraftcomplaintwasprotectedbyabsolutejudicialprivilegebecauseitwaspublishedtointerestedpartiesinanattempttoresolveaprospectivelawsuit.

Ruling:Onappeal,theSCOVaffirmed.ItnotedthatVirginia’s“broadruleofabsoluteprivilege”isnotlimitedtostatementsattrial,butencompassesallproceedingsofajudicalnature.

Inreachingitsdecision,theSCOVadoptedthepositionexpressedinRestatement(Second)ofTorts§§586and587,andthecommentsthereto.UndertheRestatement’sanalysis,apartyandhisattorneyhaveabsoluteprivilegeincommunica-tionsabout--butpreliminaryto--ajudicialproceedingthatisunderseriouscontemplation.TheSCOVlimitedtheprivilegetocommunicationsmadetopersonswithaninterestinthepro-posedproceeding.

Key Holding(s):

• Acommunicationmadebeforeapartycommenceslitigationisabsolutelyprivilegedagainstaclaimfordefamationwhere:(1)thecommunicationrelatestothelegalproceedingthatwascontemplatedingoodfaithandunderseriousconsideration,(2)thestatementwasrelatedtothatproceeding,and(3)thecommunica-tionwasdisclosedtoaninterestedperson.

F F F

Civil ProcedureCase: Nolte v. MT Technology Enterprises, Record No.

111490(6/7/2012)Author: LemonsLower Ct.: CityofRichmond(Spencer,MargaretP.)disposition: Aff’dinPart,Rev’dinPart

Facts: Inabusiness-tortaction,thetrialcourtsanctionedthedefendantsfortheirfailuretorespondtodiscovery,andbarredthemfromeither(1)opposingplaintiff’sclaimsor(2)introduc-ingevidencetosupporttheirdefenses(includingcross-examin-ingplaintiff’sdamageswitnesses).Italsoentereddefaultjudg-mentagainstoneofthem.

Thejuryreturnedalargeverdict.Defendantsmovedtoset

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asidetheverdictandforjudgmentasamatteroflaw.Amongotherthings,theyarguedthatthesanctionswereunwarrantedandtooharsh,thattheplaintiffLLC’sfailuretoregisterandtoobtainacertificateofauthorityunderCode§13.1-1057(A)pre-cludeditfrommaintainingtheactionagainstthem,andthatthetrialcourterredinissuinginstructionsthattooktheissueoflia-blityawayfromthejury.Thetrialcourtdeniedthesemotionsand,onplaintiff’smotion,trebleddamages.

Ruling:Onappeal,theSCOVaffirmedinpartandreversedinpart.

ItheldthattheplaintiffLLC’sfailuretoregisterandtoobtainacertificateofauthorityunder§13.1-1057(A)didnotprecludeitfrombringingthelawsuit.Theplainlanguageof§13.1-1057(A)onlypreventedunregisteredpartiesfrom“maintaining”anaction,notfromcommencingone.Aplaintiffcanremovethisbarrierbyregistering,evenduringthependingaction.

TheSCOValsoheldthatthetrialcourtdidnotabuseitsdis-cretionbysanctioningthedefendants.ButtheSCOVdidnotupholdalloftheparticularsanctionsimposedondefendants.Inparticular,itheldthatitwas“tooharsh”forthetrialcourttopreventthedefendantsfromcross-examiningplaintiff’swit-nessesorfrompresentingevidenceregardingdamages.

Finally,theSCOVheldthatthedefendantshadwaivedtheirobjectionstojuryinstructionsbecausethedefendantsfailedtoobjecttothemuntil15daysafterthejuryhadreturneditsver-dict.Rule5:25requiresobjectionstobemade“withreasonablecertaintyatthetimeoftheruling,”whichthedefendantsdidnotdo.

TheSCOVremandedforanewtrialondamagesonly.

Key Holding(s):

• AforeignLLC’sfailuretoregisterunderCode§13.1-1057(A)doesnotbaritfromcommencingalawsuit,andtheLLC’sregistration--evenafterfilingsuit--removesthebarrierto“maintaining”theaction.

• Asanctionthatforbidsapartyfromcross-examiningtheotherparty’switnessesisanextremesanction,unwarrantedunderthefactsofthecase.

• Apartywaivesobjectionstojuryinstructionswhereitdoesnotmakethoseobjectionsuntilafterthejuryreturnsaverdict.

F F F

Civil ProcedureCase: Brandon v. Cox, Record No. 111396(6/7/2012)Author: PowellLower Ct.: CityofRichmond(Hughes,MelvinR.)disposition: Affirmed

Facts: Plaintifftenantbroughtawarrantindebtagainstherlandlord,andothers,assertingthattheywrongfullywithheld

hersecuritydeposit.Thegeneraldistrictcourtruledinfavorofdefendants,andtheplaintiffappealedtocircuitcourt,whichalsoruledindefendants’favor.

Plaintifffiledamotionforreconsideration,makingtheargumentshenowadvancedonappeal.Butshefailedtobringthematteronforahearingandthecircuitcourtdidnotruleonthemotion.Theplaintiffappealedandfiledawrittenstatementoffacts.Thewrittenstatementoffactsdidnotcontainanydetailsabouttheargumentspresentedattrialorthebasisforthetrialcourt’srul-ing,anddidnotmentionthemotionforreconsideration.

Ruling:TheSCOVdismissedtheappealunderRule5:25.Itheldthatthewrittenstatementoffactsdidnotshowtheargu-mentsmadeattrialorthebasisforthetrialcourt’sruling.Itfurtherheldthattherewasnothingintherecordshowingthattheplaintiffhadbroughthermotionforreconsiderationtotheattentionofthetrialcourt.

TheSCOVobservedthatoneofthepurposesofRule5:25wastoforceapartytostateitsgroundsforanobjectionandtherebytogivethetrialcourttheopportunitytoruleintelligently--andtocorrect--anyassertederror.Plaintifffailedtodosoeitherattrial(becausetherewasnomentionoftheargumentsinherwrittenstatementoffacts)orinhermotionforreconsideration(whichtheplaintiffneverbroughtonforahearinganduponwhichthetrialcourtneverruled).

Becausenothingintherecordshowedthatplaintiffgavethetrialcourttheopportunitytoruleonherassignmentsoferror,shewaivedthoseargumentsunderRule5:25.

JusticeMimsdissented.

Key Holding(s):

• Merelyfilingamotioninthetrialcourt’sclerk’sofficedoesnotpreserveanissueforappeal.Thepartyalsomustplacethemotionbeforethetrialcourtandobtainarulingonit.

F F F

FraudCase: Murayama 1997 Trust v. NISC Holdings, LLC,

Record No. 111337(6/7/2012)Author: McClanahanLower Ct.: FairfaxCounty(Thacher,Jonahan)disposition: Affirmed

Facts: Toresolveapreviousbusiness-tortdispute,theplain-tiffagreedtosellitssharesinoneofthedefendantcorpora-tions.Thesettlementagreementrepresentedthattheshareswereworth$1million,anddefendantstoldtheplaintiffthattheywereworth$2million.Aspartofthesettlement,plaintiffsoldthemfor$2million.Thesettlementagreementwaivedallcausesofactionarisingunderit.Anditcontaineddisclaim-erstotheeffectthatthestockmightbeworthmorethantheagreed-uponpurchaseprice.Plaintiffwasrepresentedbycoun-selinthataction.

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LitigationNews Summer2012Atthetimethepartiesexecutedthesettlementagreement--andunbeknownsttotheplaintiff--thedefendantswereintheprocessofsellingtheirbusinesstoIBM.IBMultimatelypaid$367millionforit.Ifplaintiffhadnotsolditsshares,itwouldhaverealized$9millionfromthissale.Plaintiffsueddefendantsforfraudseekingthe$7milliondifferenceplus$350,000forpunitivedamages.Plaintiffalsoassertedclaimsfornegligentmisrepresentation,breachoffiduciaryduty,abuseofprocess,andunjustenrichment.

Thetrialcourtsustainedthedefendant’sdemurrer,findingthattheplaintiff’sallegationsfailedtoestablishthatithadreason-ablyreliedupon(1)thedefendants’silenceaboutthesaleand(2)thedefendants’representationoftheshares’value.

Ruling:Onappeal,theSCOVaffirmed.Itnotedthat,inthesettlement-agreementcontext,apartyassertingfraudbytheotherpartymustestablish“justifiablereliance”--i.e.,thatithadtherighttoreasonablyrelyontheotherparty’smisrepresentation.

QuotingitsearlierdecisioninMetrocall of Delaware, Inc. v. Continental Cellular Corp.,236Va.365,373-74,437S.E.2d189,193(1993),thecourtheldthat“thereis‘nologicalbasis’forpartieswhoare‘representedbycounselandinvolvedinanadversarialrelationship’toexpect‘fulldisclosuretotheadverseparties,priortosettlement.’”

Thus,itheldthat“partiestoasettlementagreementthatwereinanadversarialrelationshipandrepresentedbycounselatthetimeofnegotiationandsettlement...willbeheldto[a]rea-sonablereliancestandard.’”

Inlightoftheearlierlitigation,theplaintiffhadeveryreasontobeskepticalofthedefendants’actionsandrepresentations.Uponthepleadedfacts,theplaintiff--asamatteroflaw--couldnothavereasonablyreliedonthethedefendants’representa-tionsvis-à-vistheshareprice.Becausethesettlementcon-tainedafullrelease,thetrialcourtcorrectlysustainedthedefendants’demurrer.

TheSCOValsoheldthatthetrialcourt’ssuspensionofdiscov-erypendingdispositionofthedemurrerwasnotanabuseofdiscretion.

Key Holding(s):

• Innegotiatingandexecutingasettlementagreementwithanadverseparty,apartywhoisrepresentedbycounselwillbeheldtoareasonable-reliancestandard.

F F F

Workers’ CompensationCase: Napper v. ABM Janitorial Servs.-Mid Atlantic,

Inc., Record No. 111300(6/7/2012)Author: LemonsLower Ct.: ArlingtonCounty(Kendrick,BenjaminN.A.)disposition: Reversed

Facts: Buildingownerleasedspacetotenant,whooperated

acallcenter.Theleaserequiredthebuildingownertocleanthecommonareasandthelessee’sofficespace.Thebuildingownerhiredacompanytomanagetheproperty.Theproperty-managementcompany,inturn,hiredamaintenancecompanytocleanthebuilding.

Apuddleofliquidinthebuilding’slobbycausedoneofthelessee’semployeestofallandinjureherself.Theemployeebroughtanegligenceactionagainstthemaintenancecompanyandthemanagementcompany.Thedefendantsfiledapleainbar,contendingthattheplaintiffwasastatutoryco-employeeofthedefendantsand,assuch,wasbarredbytheworkers’com-pensationstatute’sexclusivityprovision.

Thetrialcourtsustainedtheplea.Itreasonedthatjanitorialserviceswereanintegralpartofthelessee’sbusinessandsodefendantswereplaintiff’sstatutoryco-employees.

Ruling:Onappeal,theSCOVreversed.

Intheworkers’compensationcontext,courtsusethe“strangertothework”testtodeterminewhetherapersonisan“otherparty”(and,thus,amendabletosuit).Courtsexaminewhethertheindependentcontractorwasperformingworkthatispartofplaintiff’semployer’strade,business,oroccupation.

Itisnotenoughthattheindependentcontractorprovidesaser-vicethatisessential totheplaintiff’semployer’sbusiness--itmustperformworkthatispart oftheplaintiff’semployer’sbusiness.

Applyingthatprinciple,theSCOVheldthatthedefendants’provisionofcleaningservicestothecallcenterwasnotapartofthecallcenter’strade,business,oroccupation.Althoughjanitorialservicesmightbeessentialtoeverybusiness,theyarenot“partof”everytrade,business,oroccupation.Indeed,therewasnoevidencethatanyofthelessee’semployeesdidanyjanitorialwork.Accordingly,theplaintiffwasnotastatutoryco-employeewiththedefendants.

Key Holding(s):

• Todeterminewhetheranindependentcontractorisastatutory“co-employee”or,instead,an“otherparty”forworkers’-compensationpurposescourtsapplythe“strangertothework”test.Underthistest,courtsexaminewhethertheindependentcontractorwasper-formingworkthatwaspartofplaintiff’semployer’strade,business,oroccupation.

F F F

EvidenceCase: Funkhouser v. Ford Motor Co., Record No.

111207(6/7/2012)Author: McClanahanLower Ct.: AlbemarleCounty(Peatross,PaulM.,Jr.)disposition: Reversed

Facts: AnelectricalfireinthedashofaFordWindstarmini-

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vankilledathree-year-oldchildwhowasplayinginit.PlaintiffallegedthatFordknewofthedangerof“key-offdashareaelectri-calfires”inWindstarminivansbutfailedtowarnhimaboutthis.

TheplaintiffsoughttointroduceevidenceofsevenotherWindstarfiresthathadoccurredbeforetheincidentgivingrisetothesuit.Defendantfiledamotioninliminetoexcludethisevidence,whichthetrialcourtgranted.Thecourtreasonedthatbecausetheplaintiffhadnotidentifiedaspecificmechanicalcauseforthefire,hecouldnotestablishthatthesamemechani-caldefectcausedtheearlierfires.Forthisreason,thetrialcourtheld,itwasimpropertochargeFordwithactualnoticeofadefectiveconditionrequiringawarning.Thus,itheld,evi-denceofthoseearlierfireswasinadmissible.

Thetrialcourtalsobarredplaintiff’sexpertfrommentioningthestudieswhenofferinghisopinion.

Ruling:Onappeal,theSCOVreversedinpart.

Itnotedthatevidenceofothersimilaroccurrencesisadmissibletoestablishthedefendant’sknowledgeoftherelevantdefect.Butsuchotheroccurrencesmustoccurundersubstantiallythesamecircumstancesandbecausedbythesameorsimilardefectsordangersasthoseinissue.Moreover,theevidenceisadmissibleonlyforthepurposesofestablishingnotice.

Becausetheplaintiffbroughtafailure-to-warnclaim—notadefective-designclaim—theSCOVheldthathedidnotneedtoestablishthattheotherincidentshadidentical mechanical causesasthesubjectone.Heneededonlytoshowthatthefiresoccurredundersubstantially the same conditionsasthesubjectfireandwerecausedbythesameorsimilardefects.

Thecourtheldthatfourofthesevenreportsmetthiscriteria,astheywereelectricalfiresoriginatinginthedashboardareawhenthekeywasoutoftheignition.Theremainingthreereportswereinadmissible,astherewasnoevidenceofaninvestigationintothecauseororiginofthesefires.Theplaintiff’sexpertcouldtestifyaboutthefouradmissiblefireinstances,butnotaboutthethreeothers.Nevertheless,theexpertstillcouldrelyonthethreeinadmissiblefires,informulatinghisopinion,providedthattheinformationordataaboutthemwasofatypenormallyrelieduponbyothersinthatfieldofexpertise.

JusticesPowell,Kinser,andGoodwyndissented.

Key Holding(s):

• Inafailure-to-warnpersonal-injurycase,evidenceofpriorsimilarinstancesisadmissibletoshowthedefendant’snoticeofadefectonlywheretheincidentsaroseundersubstantiallythesameconditionsandwerecausedbythesameorsimilardefectsastheincidentinquestion.

F F F

Personal InjuryCase: Cline v. Dunlora South, LLC, Record No. 110650

(6/7/2012)Author: GoodwynLower Ct.: AlbemarleCounty(Peatross,PaulM.,Jr.(Judge

Designate))disposition: Affirmed

Facts: A“dying,dead,orrotten”treefellonplaintiff’svehi-cleashewastravelingalongapublichighway,injuringhim.Thetreewasonprivateland.Theplaintiffsuedtheowner,claimingthattheowner’sfailureproperlytomaintaintheprop-ertycausedtheaccident.Thedefendantdemurred,contendingthatVirginiadoesnotrecognizeapersonal-injuryclaimfortreesthatfallonpublichighways.Thetrialcourtsustainedthedemurrer.

Ruling:Onappeal,theSCOVaffirmed.Itnotedthat,atcom-monlawalandownerdidnotoweanydutytothoseoutsidethelandforinjuriescausedbynaturalconditionsontheland--nomatterhowdangerous.AlthoughvariousSupremeCourtofVirginiacaseshaveheldthatneighboringlandownersmaybringanuisanceclaimarisingoutofencroachingvegetation,nocasehasheldthatlandownersoweadutyofcaretoprotectpassersbyonpublichighwaysfromnaturalhazardsontheprop-erty.Thelandowner’sonlydutyistorefrainfromaffirmativelyactinginamannerthatthreatenspassersbywithhazardsthatexceedtheperilthatthestateofnaturepresents.

JusticesLemons,Mims,andPowelldissented.

Key Holding(s):

• Alandownerdoesnotoweatortdutyofcaretopreventnaturalconditions--includingdead,decayed,orrottentrees--frominjuringpassersbyonapublichighway.

F F F

Workers’ CompensationCase: Giordano v. McBar Inds., Inc., Record No.

111771(6/7/2012)Author: PowellLower Ct.: CityofRichmond(Jenkins,ClarenceN.,Jr.)disposition: Aff’dinPart,Rev’dinPart

Facts: Husbandandwifeseparatedbutlaterreunited.Afterreuniting,however,theykepttheirfinancesseparate.Husband,whoworkedasaninsulationsubcontractor,waskilledinacon-structionaccidentinwhichamaterialssupplierdeliveredtwotonsofdrywalltothesecondfloor,causingthestructuretocol-lapse.

TheWorkers’CompensationCommissionawardedfuneralexpensestothehusband’sestate,butdeniedbenefitstowidow,findingthatshewasnotherhusband’s“dependent.”

Thewidow,suingasthepersonalrepresentativeoftheemploy-

27


ee’sestate,broughtawrongful-deathclaimagainstherhus-band’semployer,amongotherfirmsinvolvedintheconstruc-tionproject.Thetrialcourtdismissedthecomplaint,findingthatitwasbarredbytheexclusivityprovisionoftheWorkers’CompensationAct.

Ruling:OnappealtheSCOVaffirmedinpartandreversedinpart.

ItheldthattheActdidapplyandsotheexclusivityprovisionalsoapplied.ThiswassoeventhoughtheCommissionhaddeniedherbenefits.

Nevertheless,theSCOVreversedthetrialcourt’srulingastothedrywallsupplier.Itheldthattheexclusivityprovisiondidnotapplybecausethesupplierwasan“otherparty.”Itsonlyroleintheconstructionprocesswastodeliverthedrywallandplaceitinlocationsdictatedbytheworkers.

Key Holding(s):

• WheretheWorkersCompensationActapplies,theexclusivityprovisionbarsaplaintiff’sclaimagainsttheemployereveniftheCommissionearlierhaddeemedtheplaintiff,anon-dependent,tobeineligibleforbenefits.

• Asupplierwhodoesnothingmorethandelivermateri-alsfortheplaintiff’semployerandplacethemwheretoldisan“otherparty”undertheActandisnotpro-tectedbytheAct’sexclusivityprovision.

F F F

Premises LiabilityCase: Steward v. Holland Family Properties, Record

No. 110113(6/7/2012)Author: LacyLower Ct.: CityofSuffolk(Andrews,WilliamC.(Judge


Facts: Leasedpropertieshadcrackingandpeelingleadpaint.Tenant’ssonsufferedleadpoisoning,causingpermanentmen-talandphysicalinjury.Theson,throughhisnextfriend,suedlandlordsfornegligenceperse,basinghisclaimonthefactsthat(1)theleasespromisedtocomplywithapplicablebuildingandhousingcodesmateriallyaffectingsafety,and(2)thepertinentbuilding-codeprovisionrequiredthatfacilitieswithleadpaintbemaintainedinaconditionfreeofpeeling,chipping,andflaking.

Thelandownersdemurred,arguingthatneithertheleases,thecommonlaw,noranystatuteimposedatortdutyontheland-lords.Thetrialcourtsustainedthelandlords’demurrers.

Ruling:Onappeal,theSCOVaffirmed.

Underthenegligence-per-sedoctrine,astatutemaysupplytherelevantstandardofcare.Insuchcircumstances,aviolationofthestatuteisapersebreachofthestandardofcare.Theissue

inthecase,however,waswhetherthelandlordsinthefirstplaceowedatortdutyofcare.

TheSCOVheldthattheydidnot.Therewasnocommonlawdutybecause“[u]nderthecommonlaw,intheabsenceoffraudorconcealment,alandlordhasnodutyofcaretomaintainorrepairleasedpremiseswhentherightofpossessionandenjoy-mentofthepremiseshaspassedtothelessee.”TheSCOVheldthatthetenant,notthelandlords,hadtherightofpossession.Itspecificallyheldthatthelandlords’limitedrightofentrytomaintainandtorepairthehousedidnotconstitutepossessionbythelandlord.Thus,therewasnocommon-lawdutyofcare.

TheSCOVlikewiseheldthatplaintiffcouldnotbasehisclaimon§55-248.13(A)(1)--theprovisionintheVirginiaResidentialLandlordTenantActthatrequireslandlordstocomplywithapplicablebuildingcodes.TheSCOVheldthatthisstatutedidnotcreateatortdutyofcare.

Plaintiff,however,arguedthatthestatuteformedthebasisforanegligenceperseaction.TheSCOVrejectedthisargument,notingthatanegligenceperseclaimrequiresanunderlyingdutyofcare.Althoughthecitedstatutemightsupplyastan-dardofcare,itdoesnotsupplyatortdutyofcare.

Finally,theSCOVrejectedtheplaintiff’sargumentthatthelandlordsnegligentlyrepairedtheproperty,asplaintifffailedtoallegeanyrepairsinvolvingtheleadpaint.

Key Holding(s):

• Inanegligence-per-secase,theallegedlyviolatedstatuteorregulationprovidesthestandardofcarebutitdoesnotprovidetheunderlyingduty.Tobringanegligence-per-seaction,theplaintiffmustidentifyanexistingtortdutyofcare.

F F F

Business TortsCase: 21st Century Systems, Inc. v. Perot Systems

Government Services, Inc., Record No. 110114(6/7/2012)

Author: LemonsLower Ct.: FairfaxCounty(Alden,LeslieM.)disposition: Aff’dinPart,Rev’dinPart

Facts: ThePlaintiffcorporationwasanavyconsultant.Itallegedthatthedefendants,itsformeremployees,conspiredtodestroythebusinessandtostealbusinessbyimproperlyusingPlaintiff’sconfidentialandproprietaryinformation.Itsoughttreblecompensatorydamagesand$350,000inpunitivedam-agesfromeachdefendant.

Partofplaintiff’sclaimwasaclaimforlostgoodwill.Plaintiff’sexpertdefinedgoodwillas“thedifferencebetweenthefairmarketvalueofthecompany,minusthefairmarketvalueofitsidentifiableassets.”Beforetrial,thecompany--alongwithitsparentcompany--hadbeensoldtoDell,Inc.Theexpertestablishedthelostgoodwillby:(1)calculatingthetotal

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LitigationNews Summer2012goodwillofplaintiffanditsparentbysubstractingthevalueoftheassetsfromthesaleprice,(2)determininghowmuchofthatgoodwillDellattributedtotheplaintiff,ratherthanitsparent,(3)allocatingthatgoodwillamongplaintiff’scontractsbydividingthegoodwillbyannualrevenue,yieldingaratioof$2.57ofgoodwillforevery$1.00ofrevenue,and(4)multiply-ingthelostrevenuecausedbythedefendants’departurebythis$2.57figure.

Theplaintiffalsosoughtcompensationforthecomputer-foren-sicinvestigationitconductedtodeterminetheextenttowhichtheplaintiff’sconfidentialfilesandtradesecretshadbeencom-promised.

Thejuryreturnedaverdictfortheplaintiffuponwhichthetrialcourtenteredjudgment.

Ruling:TheSCOVheldthattheplaintiff’sgoodwillexpertdidnotanalyzetheissueappropriately,andthatthetrialcourterredinrefusingtostriketheclaimforgoodwill.Theexpertbasedhisestimateoflostgoodwillonthesubsequentsaleofthebusi-ness--notoncomparableothersales.Thus,thecourtheld,theexpertneededtoshowthatthesalepricetoDellreflectedalossofgoodwillattributabletotheconspiracy.Becauseplaintiff’sexpertfailedtodothis,histestimonywasinsufficientasamat-teroflawtosupportanawardoflost-goodwilldamages.

TheSCOV,however,rejectedthedefendants’argumentthattrebledamagesandpunitivedamageswereduplicative.Itsaidthatawardingbothwasappropriatewheretheyinvolvedseparateclaimswithdifferentlegaldutiesandinjuries.TheconspiracyandUniformTradeSecretsActclaimsinvolveddif-ferentlegaldutiesandinjuries,andsoawardingbothtrebleandpunitivedamageswasappropriate.

Finally,theSCOVheldthattheplaintiffcouldrecoverthecostsofthecomputer-forensicinvestigation.Itrejecteddefendants’argumentthattheserepresentedlitigationexpenses,notingthat(1)defendantsfailedtoobjectattrialtotheintroductionofthedetailedinvoices,and(2)defendantsmadenoefforttoappor-tionforensicexpensesforbusinesspurposesfromthoseforlitigationpurposes.

JusticesMcClanahanandPowellconcurredinpartanddis-sentedinpart.

Key Holding(s):

• Whereabusiness-valuationexpertbaseshislost-goodwillestimateonasubsequentsaleinvolvingthesamefirm,theexpertmustestablishwhether,andhowmuch,thelostgoodwillaffectedtheactualsaleprice.

• Acourtmayawardpunitivedamagesandtrebleddam-agesconcurrentlyifthetwotypesofdamagesinvolveseparateclaimswithdifferentlegaldutiesandinjuries.

F F F

APRIL SESSIon 2012Sovereign ImmunityCase: Seabolt v. County of Albemarle, Record No.

110733(4/20/2012)Author: MimsLower Ct.: AlbemarleCounty(Higgins,CherylV.)disposition: Affirmed

Facts: Plaintiffbroughtapersonal-injuryactionagainstthecounty,assertingthatitwasgrosslynegligentinmaintainingapark.Thecircuitcourtsustainedthecounty’sdemurrertothegross-negligenceclaim,anddidnotruleonthesovereign-immunitydefensethatthecountyhadraised.Theplaintiffappealedthisruling,andthecountydefendedonthealternategroundthatprinciplesofsovereignimmunitydeprivedthetrialcourtofjurisdictiontoruleonthemerits.

Ruling:Onappeal,theSCOVaffirmedonsovereignimmu-nitygrounds.ItnotedthatcountiesenjoysovereignimmunityandareimmunefromtortactionsexcepttotheextentthattheGeneralAssemblyhaswaivedsuchimmunity.

TheSCOVexplainedthattheVirginiaTortClaimsActexpresslyexcludescountiesfromitslimitedabrogationofimmunity.AndCode§15.2-1809--astatutethatallowsclaimsagainstcitiesandtownsforgrosslynegligentmaintenanceofparks--appliesonlytocitiesandtowns,notcounties.Finally,itheldthatthepresentmentandappealprocessesof§§15.2-1243etseq.appliedonlytocontractclaims,nottortclaims.

Key Holding(s):

• Trialcourtslacksubject-matterjurisdictionovertortclaimsbroughtagainstcountiesbecausesovereignimmunityshieldscountiesfromalltortliability.

F F F

FraudCase: Orthopedic & Sports Physical Therapy Assocs.,

Inc. v. Summit Group Properties, Record No. 110849(4/20/2012)

Author: PowellLower Ct.: SpotsylvaniaCounty(Brown,J.Howe(Judge

Designate))disposition: Reversed

Facts: Agroupofphysicaltherapistsenteredintoanarrange-mentwithtwophysiciangroups--acardiologygroupandanorthopedistgroup--toerectanofficebuilding.Theyplannedtoestablishaseparateentity,anLLC,thatwouldownthebuildingandleasebackthespacetothehealth-caregroups.

Atthetime,thephysicaltherapistsreceivedmostoftheirreferralsfromtheorthopedistgroupandhadassumedthatsuchreferralswouldcontinueinthenewofficebuilding.Butthephysiciangroupinsteadchosetocreateitsownphysical-

29

LitigationNews Summer2012therapypracticealongsideitsexistingorthopedicandmedicalpractice.Thephysicaltherapistssubsequentlyabandonedthepremises,violatingthetermsofthelease.

TheLLCthatownedthebuilding--whosemembersincludedtheorthopedicphysicians--suedthephysicaltherapistsforabreachofthelease.Thephysicaltherapistscounterclaimedforfraudintheinducement,claimingthattheorthopedistgrouphadmis-ledthephysicaltherapistsintobelievingthattheorthopedist’spracticewouldcontinuetoreferpatientstoit.

Attrial,thecourtinstructedthejurythattofindthattheLLCwasliableforfraud,itneededtofindthattheLLCmem-bersauthorizedthefraudulentconduct.Thephysicalthera-pistsobjectedtothisinstruction,arguingthatauthorizationwasunnecessarywheretheactionoccurredinthe“ordinarycourseofbusiness.”ThejuryfoundfortheLLCandawarded$187,000indamages.

Ruling:Onappeal,theSCOVreversed.

ItagreedwiththephysicaltherapiststhatauthorizationbytheLLCmemberswasnotnecessarytobindtheLLCwheretheLLCmember’sactionsweredoneintheordinarycourseoftheLLC’sbusiness.Anditfoundthattheinstructiongiventothejury--whichfailedtomentiontheordinary-course-of-businessexception--wasmisleading.

InsorulingtheSCOVheldthatapartyisentitledtoajuryinstructionsupportinghisorhertheoryofthecaseifthereismorethanascintillaofevidencetosupporttheclaim.Becausetherewasmorethanascintillatosupportthephysicalthera-pists’argumentthattheLLCmemberwasactingwithinthescopeofLLCbusinesswhenhemisledthephysicaltherapistsintoenteringintothelease,thetrialcourterredinnotinstruct-ingthejuryabouttheordinary-course-of-businessrule.Itfoundthatthiswasnotharmlesserror,asthejurycouldhavebeenmisledintobelievingthattheconsentofallmemberswasneededevenwheretheactwasdoneintheordinarycourseoftheLLC’sbusiness.

TheSCOVreversedandremandedforanewtrial.

Key Holding(s):

• ThefraudulentactsofanLLCmembercanbeattrib-utedtotheLLCifthemember’sactionsweredonewithintheordinarycourseoftheLLC’sbusiness.

• Apartyisentitledtoanaccurateandcompletejuryinstructionsupportinghisorhertheoryofthecasewherethereismorethanascintillaofevidencetosup-portit.

F F F

ContractCase: Environmental Staffing Acquisition Corp. v. B &

R Construction Mgt., Inc., Record No. 111067(4/20/2012)

Author: PowellLower Ct.: CityofPortsmouth(Melvin,KennethR.)disposition: Affirmed

Facts: Thiscasearoseoutofaconstructionprojectinvolv-ingthePortsmouthRedevelopmentandHousingAuthority(“PRHA”).Thedeveloperenteredintoacontractwithcon-tractor.Thatcontractrequiredthecontractortoprocureaperformanceandpaymentbond.Italsocontainedaprovisionthatexcludedthird-party-beneficiaryclaimsagainsttheowner,PRHA.Thisprovisiondidnot,howeverpurporttoexcludesuchclaimsagainstthecontractor.

Pursuanttoitscontractwiththedeveloper,thecontractorpro-curedaperformanceandpaymentbond.Whenasubcontrac-torfailedtopayforsub-sub-contractor’swork,thesub-sub-contractorsoughttomakeaclaimonthebond.Thebondingcompany,however,hadgoneoutofbusiness.Sothesub-sub-contractorsuedthecontractor,allegingthatitwasathird-partybeneficiaryofthecontractbetweenthedeveloperandthecon-tractor.

Thetrialcourtsustainedthecontractor’sdemurrer,holdingboththat(1)therewasnoevidencethatthecontractingpartieseverintendedtomakethesub-sub-contractorathirdpartybenefi-ciary,and(2)thecontactbetweenthedeveloperandcontractorexpresslydisclaimedthattherewereanythird-partybeneficia-riestotheagreement.

Ruling:Onappeal,theSCOVaffirmed.First,itstrucktwoassignmentsoferrorasthoseassignmentsdidnotaccuratelystatethetrialcourt’srulingandso,underRule5:17(c)(1)(iii),theywereinsufficient.

Next,itheldthatthetrialcourthaderredinconcludingthatthecontractexplicitlybarredthird-party-beneficiaryclaimsagainstcontractor--theprovisioninquestiononlybarredthird-party-beneficiaryclaimsagainstPHRAandHUD.

Nevertheless,theSCOVheldthatthiserrorwasharmlessbecausethesub-sub-contractorhadfailedtoestablishthatitwasathird-party-beneficiarytotheagreement.Althoughthesub-sub-contractorincidentallybenefittedfromthecontract’sbondrequirement,thesub-sub-contractorfailedtoestablishthattheparties“clearlyanddefinitely”intendedtoconferabenefitonit.Indeed,acontractprovisionexplicitlystatedthattherightswerecreatedsolelyforthebenefitofthedeveloperanditssuccessors,includingPHRA.

Thesub-sub-contractor’srelianceonCode§2.2-4337--whichconferscertainrightsonprovidersoflaborandmaterialforpublicbuildings--wasmisplacedbecausethestatutedidnotaltercontractterms.Ithadadifferentremedialmechanism.

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LitigationNews Summer2012Key Holding(s):

• Tobeathird-partybeneficiarytoacontract,thecon-tractmustclearlyanddefinitelyexpressanintenttobenefitthatparty.

• Thefactthatapartyincidentallybenefitsfromacon-tractdoesnot,initself,establishthatitisathird-partybeneficiaryofacontract.

• Assignmentsoferrorthatdonotaccuratelyexpresstheorderappealedfromare“insufficient”underRule5:17(c)(1)(iii).

F F F

Real PropertyCase: Mathews v. PHH Mortgage Corp., Record No.

110967(4/20/2012)Author: MimsLower Ct.: NelsonCounty(Gamble,J.Michael)disposition: Aff’dinPart,Rev’dinPart

Facts: PlaintiffpropertyownersconveyedadeedoftrusttosecureaHUD-insurednote.DefendantPHHbecameholderofthenote.Whentheownersdefaultedonloanpayments,PHHappointedasubstitutetrusteetoforecloseonthenote.

TheownersthensuedPHHallegingthat,under24C.F.R.§203.604--whichtheyclaimedthatthedeedoftrustincorpo-ratedbyreference--PHHneededtohaveaface-to-facemeetingwiththematleast30daysbeforecommencingforeclosurepro-ceedings.BecausePHHhadnothadsuchameeting,theown-ersclaimedthattheforeclosurewasimproper.

Thetrialcourtheldthatthedeedoftrustincorporatedtheregu-lation,butthattheownerscouldnotsueforbreach,astheywerethefirsttobreachthecontract.Moreover,itheldthattheregulationdidnotapplytothecircumstancesofthecasebecausePHHdidnothavea“servicingoffice”within200milesoftheproperty.


First,itheldthattheowners’defaultonthenotedidnotpre-cludethemfromenforcingthedeedoftrust’sconditionsprec-edent.TheSCOVnotedthattheprimarypurposeofadeedoftrustwastoallowthecreditortoforecloseininstancesofnonpayment.Soifdefaultonanoteeliminatedtheowners’abilitytoenforcethedeedoftrust’sconditionsprecedent,thiseffectivelywouldmeanthatnonpaymentwastheonlycondi-tionprecedentinadeedoftrust.Buta“materialbreach”mustbeonethatdefeatsanessentialpurposeofthecontract.Themainpurposeofadeedoftrustistospecifytheconditionsthatoccurafteradefaultonthenote,soadefaultonthenotedoesnotfrustratethepurposeofthedeedoftrust,itfurthersit.Accordingly,adefaultonthenoteshouldnotbarenforcementofconditionsprecedentinadeedoftrust.

Second,theSCOVheldthatthedeedoftrustincorporatedtheregulation.Thedeedoftrust’sprovisionforaccelerationofdebtspecificallystatedthatitwassubjecttoregulationsissuedbytheHUDSecretary.ThefactthatthecontractdidnotstatewhichspecificHUDregulationsapplieddidnotpreventtheregulation--whichbarsalenderfromacceleratingorforeclosingonadebtunlessthelendersatisfiescertainconditionsprece-dent--fromapplyingtothecase.Sotheregulationwasacondi-tionprecedenttoPHH’sforeclosingontheowners’note.

Third,theSCOVheldthatthelenderfailedtocomplywithHUDregulations--includingthe“face-to-faceinterview”requirement.ItheldthattheregulationappliedbecausePHHhad“branchoffices”thatwerewithin200milesoftheprop-erty.Thesewereloan-originationoffices,notservicingoffices.NeverthelesstheSCOVheldthatloan-originationofficeswere“branchoffices”forregulationpurposes.

TheSCOVrejectedaHUD“frequentlyaskedquestions”docu-ment,whichcametotheoppositeconclusion.TheSCOVstat-edthatitdidnotneedtodefertoHUD’sinformalinterpretivestatementbecause(1)theinterpretationhadnotgonethroughthenotice-and-commentprocess,and(2)theterm“branchoffice”isunambiguousandencompassesloan-originationoffices.

BecausePHHhada“branchoffice”within200milesoftheproperty,theregulationapplied.AndbecausePHHfailedtocomplywiththeregulation’sface-to-faceinterviewrequire-ment,theforeclosurewasimproper.

Key Holding(s):

• Anowner’sdefaultonamortgageloandoesnotpre-cludehimorherfromenforcingthedeedoftrust’sconditionsprecedent.

• Toincorporatearegulationintoacontract,thepartiesneednotidentifythespecificregulationstheyintendtoincorporate.

• Acourtneednotdefertoagencypronouncementsonthemeaningofaregulationwhere:(1)theinterpreta-tiondidnotgothroughthenotice-and-commentproce-dure,or(2)thelanguageinquestionisunambiguous.

F F F

Personal InjuryCase: Burns v. Gagnon, Record No. 110754(4/20/2012)Author: MilletteLower Ct.: GloucesterCounty(Long,R.Bruce)disposition: Reversed

Facts: Plaintiffwasinjuredinaviolentattackatahighschool.Themorningbeforethefight,oneofthevictim’sfriendstoldtheviceprincipalthatthevictimwasgoingtogetintoafightwithanotherstudentsometimelaterthatday.Butthefrienddidnotstatewhotheotherpersonwasorwhenthe

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LitigationNews Summer2012attackwouldoccur.Theviceprincipalstatedthathewouldalertsecurityaboutthis,butfailedtodoso.Twohourslater,thevictimwasattacked.

Inadditiontosuinghisattackers,thestudentsuedthevice-principal,contendingthathefailedtoprotecthimfromtheattack.Theviceprincipaldemurred,claimingthathedidnotowethestudentadutyofcare.Theviceprincipalalsoassertedasovereign-immunitypleainbar.

Thetrialcourtoverruledthedemurreranddeniedthepleainbar.Onthedemurrer,thecourtheldthattheviceprincipalowedthestudentcertainunspecified“duties.”Thetrialcourtrejectedtheviceprincipal’ssovereign-immunitydefensebecause,itclaimed,theviceprincipalwasonlyactinginaministerialcapacity.Thecourtlikewiserejectedtheviceprin-cipal’scontentionthathewasimmuneunder§8.01-220.1:2,astatutethatconferscivilimmunityonteachers.

Attrial,thecourtallowedtheplaintifftopresentthedepositiontestimonyofthepersonwhohadreportedthepotentialfighttotheviceprincipal.ThewitnesswasonactivemilitarydutyinGeorgia,morethan100milesaway.Sothetrialcourtheldthat,underRule4:7,thedepositiontestimonywasadmissable.

Atthecloseoftrial,thecourtrefusedtoinstructthejuryongrossnegligence,findingthatthefactswouldnotsupportsuchaninstruction.Afterthejuryreturnedaplaintiff’sverdictwithseparateamountsforeachdefendant,thecourtaskedwhetheritwasthejury’sintentthatthedamagesbeseveral,notjoint.Thejurysaidthatthatwasitsintent.Sothetrialcourtenteredjudg-mentagainstthethreecodefendantsfortheamountsthatthejuryspecified.

Ruling:Onappeal,theSCOVreversedinpart.

Itheldthattheviceprincipaldidnothaveatortdutytoprotectthestudent.Itnotedthatthecircumstanceswherethelawwillholdapersonliableforfailingtoprotectthemadequatelyarerare,involvingeither(1)acircumstancewherethedefendantknew,orshouldhaveknown,thatthevictimwasingreatdan-gerofseriousbodilyinjuryordeath,or(2)wherethedefendanthadaspecialrelationshipwiththevictim--e.g.,ahotel-patronrelationship.Neitherofthosecircumstanceswaspresent,andtheSCOVrefusedtoexpandthefailure-to-protectcauseofactiontonewcircumstances.

Nevertheless,theSCOVheldthattheviceprincipalowedadutyto supervise and care for the plaintiff.ItstatedthatBurnscouldbefoundliableonlyifhefailedtodischargehisdutiesasareasonablyprudentpersonwould.

TheSCOValsoheldthattheviceprincipalcouldbeheldliableunderthetheorythatheassumedadutytoinvestigatethepotentialfightandtoalertsecuritytoit.Adoptingtheposi-tionadvancedintheRestatement(Second)ofTorts§324A,itheldthattheplaintiffcouldprevailinthesecircumstancesif,inadditiontoassumingthoseduties,theviceprincipal’sconduct(1)increasedtheriskoftheharm;(2)assumedthedutiesthatathirdpersonowedtothevictim;or(3)causedotherstorelyonhisassumingtheduties.

TheSCOVrejectedtheviceprincipal’scontentionthathewasimmuneunder§8.01-220.1:2.Thestatuteappliesonlyto“teachers”and,underordinaryusage,theviceprincipalwasnota“teacher.”

Italsorejectedtheviceprincipal’sclaimofimmunityunderCode§8.01-220.1:2,whichprovidesimmunityforthegood-faithreportingofbullying.Plaintiffsuedtheviceprincipalpreciselybecausehedidnotreportthemattertosecurity,notbecausetheviceprincipaldidso.Sothestatutedidnotapply.

Nevertheless,astheemployeeofanimmuneentity,theviceprincipalenjoyedpartialimmunity.Butthisappliedonlytotheextentthathisactionswere“discretionary.”TheSCOVheldthattheviceprincipal’sresponsetothereportofanimpendingfightinvolvedtheexerciseofjudgmentanddiscretion.Amongotherthings,hehadtoevaluatethecredibilityofthereport,determinewhentorespond,anddeterminehowtorespond.Thisimmunitywasnotabsolute,however.Itdidnotapplyiftheviceprincipalwasgrosslynegligent.Andthatwasaques-tionforthejury,notthecourt,todecide.

Finally,theSCOVrejectedtheviceprincipal’sevidenceargu-ments,holding,inter alia,that(1)depositiontestimonyofawitnesswhowasonactivemilitarydutyinGeorgia--morethan100milesfromthetrialcourt--wasadmissibleunderRule4:7,and(2)theplaintiff’suseofanaffidavittorefreshtherecol-lectionofthewitnesswasproper,evenwherethewitnesscom-mentedontheaffidavit.

Key Holding(s):

• Schooladministratorsdonotoweatortdutyofcaretoprotectstudentsfromtheviolentactsofothers.

• Schooladministratorshaveadutytosuperviseandcareforstudentsintheircharge.

• Whereapartyassumesaduty,heisliabletothevic-timifthatassumption(1)increasestheriskofharm,(2)constitutestheassumptionofadutyowedbyathirdpartytothevictim,or (3)ledotherstorelyuponthatassumption.

F F F

Partnerships, LLCs, and CorporationsCase: Cattano v. Bragg, Record No. 110692

(4/20/2012)Author: MilletteLower Ct.: AlbemarleCounty(Shelton,WilliamR.)disposition: Affirmed

Facts: Theminorityshareholderinatwo-lawyerprofes-sionalcorporationsuspectedthatthemajorityshareholderhadengagedinfinancialimproprieties.Shedemandedinformationaboutthefirm’sfinances.Shesuedthemajorityshareholderforbreachofcontract,toobtainthecorporaterecords,foranaccounting,andfordissolution.Shebroughtderivativeclaims

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LitigationNews Summer2012forconversionandbreachoffiduciaryduty.Andshesoughtattorney’sfees.

Themajorityshareholderarguedthattheminorityshareholderlackedstandingtobringaderivativeactionbecauseshedidnotfairlyrepresenttheinterestsofthecorporation.Thetrialcourtrejectedthisargument.Thejuryreturneda$234,412.18verdictforthefirmonthederivativeclaim,ofwhichplainitffreceived27.35%percent--representingherstakeinthecorporation.Thejuryalsoawardedtheminorityshareholder$10,416.66onthebreachofcontractclaim,and$7,409.90onthedissolutionclaim.

Thetrialcourtawardedtheminorityshareholderattorney’sfeesonhercorporate-recordsclaim,andonherderivativeclaims.


ItheldthattheminorityshareholderhadstandingunderCode§13.1-672.1(A)tobringthederivativeclaims,asshe“[f]airlyandadequatelyrepresent[ed]theinterestsofthecorporation.”Itrejectedtheargumentthataloneshareholdercouldnotbringaderivativeclaimonhersolebehalf.TheSCOVnotedthatVirginialawdoesnotrecognizeaclose-corporationexceptiontoderivativeactions,andthatotherjurisdictionshaverecog-nizedderivativeactionswherethereisjusta“classofone.”

TheSCOValsorejectedthemajorityshareholder’sargumentthattheminorityshareholderdidnotfairlyandadequatelyrepresentthefirm.Citingtheso-called“Davisfactors”thattheSCOVhadadoptedinJennings. v. Kay Jennings Family Limited Partnership,275Va.594,659S.E.2d283(2008),itheldthat--despiteeconomicantagonismandthefactthatthemajorityshareholderopposedthesuit--theminorityshareholderwasnotprecludedfromfilingaderivativeaction.Rather,itheldthatinclosecorporations,courtsshouldlooktothe“total-ityofthecircumstances”andonwhetherthereliefsoughtwouldbenefitthecorporation.Astheminorityshareholderwasknowledgeableaboutthefirm,asshewasprosecutingtheclaimvigorously,andasherinterestsinthelitigationalignedwiththefirm’sinterests,shefairlyandadequatelyrepresentedtheinter-estsofthecorporation.

TheSCOVthenheldthatmaintainingadissolutionactiondidnotbartheminorityshareholderfrombringingaderivativeclaim.Amongotherthings,itwasthemajorityshareholder’sactionsinfiringher--notheractionsinbringingadissolutionsuit--thatwastheultimatecauseofthefirm’sdissolution.

Themajorityshareholderalsoarguedthatthetrialcourterredinnotsubmittingtheissueofstandingtothejury.Butevenifitwereappropriateforajurytodecidestandingissues--apointthattheSCOVdidnotresolve--ajurywasunnecessarybecausethepartiesdidnotdisputethefactsrelevanttothestandingissue.Accordingly,thetrialcourtproperlyresolvedtheques-tion.

Lastly,theSCOVheldthatthetrialcourtproperlyawardedfeesunderCode§13.1-773andCode§13.1-672.5(1),astheplaintiffhadprevailedontherequestforcorporaterecordsandthederivativeactionresultedinasubstantialbenefittothecor-poration.

JusticeMcClanahandissented.

Key Holding(s):

• Aminorityshareholderinatwo-shareholdercorpora-tioncanbringaderivativeactionagainsttheothershareholder.

• Intheclosecorporationcontext,thefactsthat(1)theshareholderbringingthederivativeactioniseconomi-callyadversetotheothershareholders,and(2)theothershareholderopposestheaction,doesnotmeanthattheplaintiffcannotfairlyandadequatelyrepresentthecorporation’sinterests.

F F F

Civil ProcedureCase: Laws v. McIlroy, Record No. 110485(4/20/2012)Author: LemonsLower Ct.: BuckinghamCounty(Blanton,RichardS.)disposition: Reversed

Facts: The Plaintiffsintworelatedpersonal-injuryactionssubmittedunindorsednonsuitordersonJanuary8,2010.PlaintiffsfilednewactionsonJanuary19,2010.Afterdoingso,theyresubmittednonsuitordersintheinitialcase.ThecourtenteredthosenonsuitsonFebruary4,2010.

Defendantsmovedtodismisstherefiledactionsonstatute-of-limitationsgrounds,arguingthattheplaintiffswerenotentitledtoCode§8.01-229(E)(3)’ssix-monthtollingprovisionbecausethenonsuitswereenteredaftertheplaintiffshadfiledtheirsec-ondlawsuits.Thetrialcourtagreedanddismissedtheactions.

Ruling:Onappeal,theSCOVreversed.ItheldthatCode§8.01-229(E)(3)’sstatementthataplaintiff“mayrecommencehisactionwithinsixmonthsfromthedateoftheorderenteredbythecourt”encompassedsituationswherethecourtenterstheorderafterplaintifffilestherecommencedaction.

Itreasonedthat,althoughtheword“from”in“sixmonthsfromthedateoftheorder”indicatesastartingpoint,thesixmonthsmaybecomputedbackwardintimeaswellasforwardintime.Becausetheplaintiffsrefiledtheiractionswithinsixmonthsbeforethenonsuit,theywereentitledto§8.01-229(E)(3)’ssix-monthtollingrule.

JusticesMillette,Kinser,andMcClanahandissented.

Key Holding(s):

• ActionsfiledwithinsixmonthsbeforeanonsuitorwithinsixmonthsafteranonsuitaretimelyunderCode§8.01-229(E)(3).Thefactthattherefiledactioniscommencedbeforethenonsuitdoesnotexcludeapplicationofthesix-monthtollingprovision.

F F F

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Estates and TrustsCase: Keith v. Lulofs, Record No. 110443(4/20/2012)Author: PowellLower Ct.: CityofNewportNews(Fisher,TimothyS.)disposition: Affirmed

Facts: Husbandandwife--bothofwhomhadachildfromapreviousmarriage--executedwillsin1987thatwere“mirrorimages”ofeachother.Eachwilllefttheestatefirsttothesur-vivingspouse,andthenequallytothetwochildren.In1996,afterhusbanddied,thewifeexecutedanewwillleavingherentireestatetoherdaughter.Shealsochangedalifeinsurancepolicytomakeherdaughterthe100%beneficiary.

Whenwifedied,thehusband’ssonbroughtsuittochallengethe1996will.Heclaimedthatwhenhusbandandwifepre-paredtheirwillsin1987,theyintendedforthemtobemutual,reciprocal,andirrevocable.Tosupportthisclaim,hepresentedtestimonythathisparentshadtoldhimthattheyintendedforthewillstobemutuallybinding,thathisfatherhadmentionedthisonotheroccasions,thathisstep-sisterhadtoldhimthatthewillswerereciprocal,andthatthelife-insurancepolicyhadbeenchanged.Theattorneywhodraftedthewillshadnorecol-lectionofthem.Thetrialcourtheldthattheevidencethatthesonpresentedwasinsufficienttoestablishthatthehusbandandwifeintendedfortheirmirror-imagewillstobeirrevocable.


Itnotedthatmirror-imagewillsarerevocableunlessthepartyobjectingtotherevocationestablishes,by“clearandsatisfac-tory”evidence,thatthetestatorshadagreedtomakethemreciprocalforthebenefitofathirdparty.Itheldthatthemerefactthatthewillscontainedidenticaltermswasinsufficienttomakethemirrevocable.Anditalsoheldthatthecircumstantialevidencethatthesonofferedwasinsufficientbecause(1)thechangestotheinsurancepolicywereirrelevant,and(2)theremainingevidencelackedanyindependentcorroborationandsotheDeadMan’sStatute,Code§8.01-397,barredrecovery.

Key Holding(s):

• Themerefactthattwowillsare“mirrorimages”ofeachotherisinsufficienttomakethemirrevocable.

• Inawillcontest,theDeadMan’sStatuteprecludesjudgmentwherethepartychallengingthewillfailstoprovideindependentcorroborationofhisevidence.

F F F

EvidenceCase: Arnold v. Wallace, Record No. 110394 (4/20/2012)Author: MimsLower Ct.: FairfaxCounty(Brodie,JanL.)disposition: Affirmed

Facts: Inapersonal-injuryactionarisingoutofanauto-

mobileaccident,theaccidentvictimhadherphysiciantestifyaboutherinjuries.Thedefendantthensoughttointroducetheplaintiff’schartthroughthiswitness.Thechartcontainedthehearsaystatementsofphysiciansotherthanthewitness.Butthedefendantcontendedthatthestatementswereadmissibleasbusinessrecords.

Theplaintiffobjectedongroundsthatthedefendanthadnotlaidaproperfoundationforthebusiness-recordshearsayexcep-tion.Theplaintiffrefused,however,toidentifythedeficiancy.Referringtothedefendant,theplaintiffsaid“That’shisjob.”Thetrialcourtoverruledtheobjectionandallowedthedefen-danttointroducethechartintoevidence.

Theplaintiffalsoobjectedtothedefendant’suseofanexpertwhobelongedtothesamemedicalpracticeasanexpertthattheplaintiffpreviouslyhadretained.Duringvoirdire,theexperttestifiedthatthepartnerhadnotcommunicatedanyconfidentialinformationtoheraboutthecase.Buttheplaintiffarguedthatherreviewofhandwrittennotesinthechartdisqualifiedher.Thetrialcourtdidnotdisqualifythewitness.


Onthefoundationissue,theplaintiffarguedthatthechartwasinadmissiblebecausethedefendanthadnotestablishedthatthestatementsthereinwerefacts,notopinion.TheSCOVrejectedthisargument,statingthattheonuswasontheobjectingpartytoidentifythepassageswithinabusinessrecordthatcontainedtheallegedlyinadmissibleevidence.TheSCOVheldthattheplaintiffhadwaivedthisobjectionbynotidentifyinganysuchpassageattrial.

TheSCOValsoupheldthetrialcourt’sdecisiontoallowtheexpertwitnesstotestifyonthedefendant’sbehalf.Thefactthattheexpertbelongedtothesamepracticegroupasoneoftheplaintiff’sexpertsdidnotautomaticallydisqualifytheexpert.Therewasnoevidencethatplaintiff’sformerexpertsharedanyconfidentialinformationwithdefendant’sexperts.Andtheplaintifffailedtoestablishthatthehandwrittennotescontainedconfidentialorprivilegedinformation.

Key Holding(s):

• Apartyobjectingtotheintroductionofbusinessrecordsonthegroundsthatcertainstatementsthereinareopinion,notfact,mustidentifytheoffendingstate-mentsorelsehewillwaivetheobjection.

• Apartymayretainanexpertwhoisemployedatthesamefirmasoneoftheopposingparty’sformerexperts,providedthattheplaintiff’sformerexpertdidnotcommunicateanyconfidentialorprivilegedinfor-mationtothatexpert.

F F F

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Partnerships, LLCs, and CorporationsCase: Russell Realty Assocs v. Russell, Record No.

110380(4/20/2012)Author: LacyLower Ct.: CityofChesapeake(Smith,RandallD.)disposition: Affirmed

Facts: Abrotherandsisterhadinterestsinapartnershipwhosepurposewastomanagereal-estateandotherinvest-ments.Thesister’ssonhadaninterestinthepropertyandthesisterwantedthesontoplayaroleinthepartnership’smanage-ment.Thebrotherandsisterdisagreedonthisissueandmanyothers.

Thestalemateinterferedwithpartnershipbusinessopportuni-ties,causingdelayorcancellationoflucrativepropertydeals.Thebrotherbroughtadissolutionactionunder§50-73.117(5),claimingthatthedifferencesbetweenhim,hissister,andhersonhadfrustratedthepartnership’seconomicpurposeandmademanagementnotreasonablypracticable.Thesistercounteredwithanintervenorcomplaintseekinganequitableaccounting,claimingthatthebrotherhadbreachedhisfiduciarydutiestothepartnership,andseekingtoremoveherbrotherfromthepartnership.

Afteralengthybenchtrial,thetrialcourtfoundthatthebrotherhadnotviolatedanyfiduciarydutyanddeniedthesister’srequestforanequitableaccounting.Italsofoundthatthepart-nership’seconomicpurposeshadbeenfrustratedanditnolon-gercouldbeoperatedwithinthetermsofthepartnershipagree-ment.Accordingly,itorderedthatthepartnershipbedissolvedanditsbusinesswindedup.Thesisterappealedthedissolutionorder.

Ruling:Onappeal,theSCOVaffirmed.Itnotedthattherewerethreecircumstancesfordissolutionunder§50-73.117(5),anyoneofwhichissufficienttojustifydissolution.Theseare:(1)theeconomicpurposeislikelytobefrustrated,(2)apartner’sactionsregardingpartnershipbusinessshowsthatcarryingoninthebusinessitisnotreasonablypractical;or(3)itisnotother-wisepracticabletooperateunderthepartnershipagreement.

TheSCOVheldthat,aswiththeLLCstatute,thestandardforjudicialdissolutionofapartnershipwas“strict.”Butitrejectedthesister’sargumentthatdissolutionunderthe“economicpurpose”prongrequiredashowingofpoorfinancialstatus.Indeed,thecommentstoRUPAnotedthatthedraftersdeliber-atelyomittedaprovisonthatrequiredashowingthatthepart-nershipoperatedataloss.

Key Holding(s):

• TodissolveapartnershipunderCode§50-73.117(5)’sfrustration-of-economic-purposeprong,itisnotneces-sarytoshowthatthepartnershiphasoperatedataloss.

F F F

InsuranceCase: AES Corp. v. Steadfast Ins. Co., Record No.

100764(4/20/2012)Author: GoodwynLower Ct.: ArlingtonCounty(Kendrick,BenjaminN.A.)disposition: Affirmed

Facts: AvillageonanAleutianIslandsuedAES,apowercompany,andotherdefendantsforcausingglobalwarm-ingthroughemissionofgreenhousegases,whichthevillageclaimedmadeseaicemeltearlierintheyear.AES’sinsurer,SteadfastInsuranceCo.,broughtadeclaratoryjudgmentactiontoestablishthatthelawsuitwasnotcoveredbecause(1)thevillagers’complaintdidnotallege“propertydamage”causedbyan“occurrence”;(2)theallegedinjuryoccurredbeforeinceptionofSteadfast’scoverage,and(3)theclaimsfellwithinthepolicy’spollutionprovision.TheCircuitCourtgrantedSteadfast’smotionforsummaryjudgment,whichtheSCOVhadearlieraffirmed.

Ruling:Onrehearing,theSCOVagainaffirmed.Itnotedthat,incoveragedisputes,courtsfollowthe“eightcornerrule,”lookingonlytotheallegationsinthecomplaintandthetermsoftheinsurancepolicy.

Thepolicydefined“occurrence”tomean“anaccident,includ-ingcontinuousorrepeatedexposuretosubstantiallythesamegeneralharmfulcondition.”AndtheSCOVhadpreviouslyheldthat“accidentalinjury”isonethathappens“bychance,orunexpectedly.”Itdoesnotincludetheconsequencesofanintentionalact,unlessthisistheresultof“anunforeseencausethatisoutoftheordinaryexpectationsofareasonableperson.”

Thevillage’scomplaintassertedthatAES“[i]ntentionallyornegligently”releasedtonsofgreenhousegases.AnditassertedthatglobalwarmingwasthenaturalandprobableconsequencesofAES’sintentionalacts.Thus,theSCOVheldthatitwasnotan“accident”or“occurrence”andtherewasnocoverageunderthepolicy.

JusticeMimsdissented.

Key Holding(s):

• Incoveragedisputes,courtsapplythe“eightcornerrule,”lookingonlytothepolicyandthecomplaintintheunderlyinglawsuit.

• ForCGL-policypurposes,anintentionalactisnotan“accident”or“occurrence”wheretheharminquestionwasthenaturalorprobableconsequenceoftheact,eveniftheinsureddidnotactuallyforeseetheharmwhenperformingtheaction.

F F F

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Local GovernmentCase: Deerfield v. City of Hampton, Record No. 111144

(4/20/2012)Author: McClanahanLower Ct.: CityofHampton(Parker,WestbrookJ.)disposition: Affirmed

Facts: Thecitycharterauthorizedareferendumprocess.Underthisprocess,acommitteeoffivepersonswouldcirculateapetitionandfileitwiththecitycouncil.Intheeventthecitycouncilfailedtorepealoramendtheoffendingprovision,thefive-personcommitteecouldbringthematterbeforethecircuitcourttoseekentryofanordercallingforareferendum.

Acommitteewasformedtocirculateandfileapetitionforaref-erendumofthecitycouncil’sdecisiontoallowdevelopmentofcertainbeachfrontproperty.Afterthecommitteefiledthepetitionwiththecity,thetowncouncilrepealedtheoffendingordinance.

Thelandowner,however,continuedtodevelopthepropertyinaccordancewiththenow-repealedordinance--citingthezoningadministrator’svested-rightsdetermination.Sothecommitteefiledadeclaratoryjudgmentactiontodeclarethisconducttobeunlawful.

Thecircuitcourtheldthatthecommitteehadstanding,butruledagainstitonthemerits.

Ruling:Onappeal,theSupremeCourtreversedthetrialcourt’srulingonthestandingissue.

Undertheplainlanguageofthecityordinance,thepetitioncommitteeceasedtohaveanyongoingjusticiableinterestinthematteronceitsecuredarepealofthelawthatthepetitionopposed.Nothinginthecitychartercontemplatedanyfurtherroleforthecommitteeafterthatpoint.Therefore,thecommit-teelackedstandingtoparticipateinthelaterland-usechallengeregardingthatproperty.

Key Holding(s):

• Whereacityordinanceauthorizedthecreationofafive-personcommitteetoorganizeareferendumofacityordinance,butcontemplatednofurtherroleofthecommitteeafterthecityrepealedtheoffendingordi-nance,thecommitteelackedstandingtobringaland-useaction.

F F F

InsuranceCase: PBM Nutritionals, LLC v. Lexington Ins. Co.,

Record No. 110669(4/20/2012)Author: GoodwynLower Ct.: CityofRichmond(Stout,WalterW.,III)disposition: Affirmed

Facts: Manufacturerofinfantformulabroughtacoveragesuitforlossesarisingoutofproductcontaminationcausedbythe

disintegrationofwaterfiltersintheproductline.Thecontami-nationcausedmelamineandfiltermaterialstobepresentintheinfantformula.Eachofthethreepolicieshadlanguagestatingthatliabilityforreleaseofpollutantswasnotcoveredunlessthedischarge’scausewasitselfacoveredoccurrence.Buteachofthepoliciesalsohadseparateexclusionsforincidentsinvolving“contaminants”or“pollutants”--exclusionsthatdidnothavethecovered-causecarve-out.Themanufacturerclaimedthatthiscreatedaconflictinthepoliciesthatshouldberesolvedinfavorofcoverage.Thetrialcourtdisagreedandenteredjudgmentfortheinsurers.

Ruling:Onappeal,theSCOVaffirmed.Itrecitedtherulesthatexclusionsneedtodefinetheirscope“clearlyandunambigu-ously,”thatexclusionarylanguagewillbeconstruedagainsttheinsurer,andthattheinsurerbearstheburdenofestablish-ingthattheexclusionapplied.Butitnotedthattheexclusioncontainingthecovered-causecarve-outdidnotconflictwiththeotherexclusionsforcontaminantsandpollutants.Amongotherthings,itwasanexclusionnotacoveragegrant.Thefactthatoneexclusionhadanexceptiontoitdidnotcreateaconflictwithanotherexclusionthatlackedtheexception.Theexcep-tiondidnotexpandcoverage,itmerelylimitedthescopeofthatoneexclusion:“Anexceptiontoanexclusiondoesnotcreatecoveragewherenoneexists.”

TheSCOVrejectedthemanufacturer’sargumentthatthepollu-tionexclusionwasintendedtoencompassonlytraditionalenvi-ronmentalpollution,not“indoor”pollutionofthesortinvolvedinthecase.

Finally,theSCOVrejectedtheargumentthattherewasnoevidenceof“contamination.”Itnotedthatthepartieshadstipulatedthatfiltermaterialandmelaminewerepresentintheinfant-formulabatches.

Key Holding(s):

• Anexceptiontoanexclusiondoesnotexpandcover-ageandsodoesnotconflictwithotherexclusionsthatencompasssituationswheretheexceptionapplies.

F F F

Intentional TortsCase: Wyatt v. McDermott, Record No. 111497

(4/20/2012)Author: MilletteLower Ct.: U.S.Dist.Ct.(E.D.Va.)disposition: CertifiedQuestionAnswered

Facts: Plaintiffwasthechild’sbiologicalfather.Duringherpregnancy,themotherassuredthefatherthattheywouldraisethechildtogether.Unbeknownsttothefather,however,themotherandherparentshiredalawyertoassistwithanadop-tion.Thelawyerinstructedthemothertostate,falsely,onanadoptionformthatshedidnotknowthefather’saddress.

Themotherhidthechild’sbirthfromthefatherandsignedan

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LitigationNews Summer2012affidavitofpaternityidentifyingthefather.Again,however,shestatedthatshedidnotknowhiscontactinformation.Twodayslater,withthehelpofanadoptionagency,themotherrelinquishedcustodytotheadoptiveparents.

Thefatherbroughtanactioninfederaldistrictcourtagainsttheadoptiveparents,theadoptionagency,andthelawyersinvolvedinthematter.Amongothercausesofaction,thefatherbroughtaclaimfortortiousinterferencewithparentalrights.TheUnitedStatesDistrictCourtfortheEasternDistrictofVirginiacertifiedtotheSCOVtwoquestions:(1)whethertherewasacauseofactionforinterferencewithparentalrights,and(2)ifso,whatwereitselements.

Ruling:TheSCOVheldthattherewasacauseofactionfortortiousinterferencewithparentalrights.AlthoughnoVirginiacasesdealtwiththeissue,theSCOVnotedthatthepre-1607commonlawofEngland(whichVirginialawhadincorporatedunderCode§1-20)recognizedsucharight,ashadVirginia’ssisterstates.

Citinga1998WestVirginiacase,thecourtheldthattheele-mentsofthecauseofactionwere:(1)theparenthastherighttoarelationshipwiththeminorchild,(2)apersonoutsidetheparent-childrelationshipinterferedwiththisrightbyremovingordetainingthechild,orotherwisepreventingtheparentfromexercisingparentalrights,(3)theinterferenceharmedthepar-ent’srelationshipwiththechild,and(4)damagesresultedfromsuchinterference.

TheoldEnglishclaimappliedonlytofathersandsonsandcompensatedthefatheronlyforthelossoftheson’sservices.ButtheSCOVupdatedthecauseofactiontoincludegenderequalityandcompensationforemotionalharms.

Topreventabuseofthiscauseofactionbetweenparents,theSCOVheldthatparentshaveclaimsagainstonlynon-parents.Anditrecognizedanaffirmativedefenseincircumstanceswherethedefendantactedingoodfaith.

JusticesMims,McClanahan,andGoodwyndissented.

Key Holding(s):

• Virginialawrecognizesacauseofactionbyapar-entagainstanon-parentfortortiousinterferencewithparentalrights.

F F F

MARCH SESSIon 2012 Estates and TrustsCase: St. Joe Company v. Norfolk Redevelopment and Housing Authority, Record No. 102342 (3/2/2012)Author: GoodwynLower Ct.: CityofNorfolk(Doyle,JohnR.,III)disposition: Affirmed

Facts: Plaintiff,theownerofdevelopmentcompany,paid

areal-estate-servicescompanycertainfundstopayacontrac-tor.Theagentdepositedthefundsintoitsoperatingaccount.Oneoftheagent’screditors,however,hadaperfectedsecurityinterestintheagent’soperatingaccount.Exercisingitsrightsasasecuredcreditor,thecreditorwithdrewthefundsfromtheaccount.

Theownersuedthecreditor,claimingthattherewasacon-structivetrustonthefunds,andthatthecreditorwasunjustlyenriched.Thepartiessubmittedthematterforsummaryjudg-mentonstipulatedfacts,andthecourtgrantedtheownersum-maryjudgmentonbothitsclaims.

Ruling:Onappeal,theSCOVaffirmed.Itheldthatwhenanagentisentrustedwithfundsforaparticularpurpose,thosefundsareimpressedwithaconstructivetrustinfavoroftheprincipal.Ifthefundsaredivertedintothehandsofathirdparty,theprincipalcanrecoverthem--providedtheycanbetracedandidentified.Thisisso,evenifthethirdpartymixesthefundswithotherfunds.

Thefundsgiventotheagentinthiscasewereforaspecificpurpose--paymentofcontractors.Thefactthatthefundswereplacedinanoperatingaccountdidnotprecludeafindingthatthefundswereheldfortransmissiontothecontractors.

TheSCOValsorejectedtheargumentthataplaintiffassert-ingaconstructivetrustmustshowfraudorimproperconduct.Where,asinthiscase,itisinequitableforthethirdpartytoretainthefunds,thenaconstructivetrustwillattachevenifthefundshadbeenacquiredfairlyandwithoutanyimpropermeans.

Finally,theSCOVheldthatmoneycanbedistinctlytraced--evenwhenitiscommingledwithotherfunds,providedthattheaccountneverhaslessthantheamountofthepurportedconstructivetrust.Iftheaccountfallsbelowtheamount,thetrustextendsonlytothelowestaccountvalueaftertheimposi-tionoftheconstructivetrust.Thisisknownasthe“lowestintermediatebalance”ruleandisgroundedonthefictionthatwhenmoneyisremovedfromtheaccountsubjecttoaconstruc-tivetrust,theaccountholderfirstremovesfundsthatarenotimpressedwiththeconstructivetrust.

Becausethecreditor’saccountneverfellbelowtheamountoftheconstructivetrust,theownercouldrecoverthefundsinfull.

Key Holding(s):

• Apartyassertingaconstructivetrustoverfundsneednotshowthattheconstructivetrusteeusedfraudorimpropermeanstoacquirethefunds.

• Fundscanbetracedintoacommingledaccount,solongastheaccountneverfallsbelowtheamountoftheconstructivetrust.Iftheamountintheaccountdoesfallbelowthatamount,thereisonlyaconstruc-tivetrustforthe“lowestintermediatevalue”oftheaccount.

F F F

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Maritime LawCase: John Crane, Inc. v. Hardick, Record No. 101909

(3/2/2012)Author: LemonsLower Ct.: CityofNewportNews(Foster,AundriaD.)disposition: Aff’dinPart,Rev’dinPart

Facts: Thiswasanasbestos-mesotheliomacase.Plaintiff’sdecedentservedintheNavyfrom1959to1976,workingonseveraldifferentvessels--usuallyasashipfitterormachinerepairman.Inthatwork,hewasexposedtoasbestosfibers,whichcausedhisdeathfrommesothelioma.Someofthevesselsonwhichdecedentworkedwenttosea;otherswererepairedinport.

Plaintiffsued23defendants.Beforetrial,plaintiffsettledornonsuitedthe22otherdefendants,leavingJohnCrane,Inc.(“JCI”)asthesoledefendant.JCImanufacturedasbestos-containinggasketsthatdecedentusedwhileworkingonNavyships.Decedentusedgasketsmanufacturedbyothercompa-nies,too,whichwerenearlyindistinguishablefromJCI’sgas-kets.So,althoughtherewasevidencethatthedecedentusedJCIgaskets,therewasnoevidencethatJCImanufacturedanyparticulargasketthatthedecedentworkedwith.

Beforetrial,JCImovedtoexcludeevidenceofnonpecuniarydamages.Itarguedthatthedecedentwasa“seaman”forpur-posesoftheDeathontheHighSeasAct(“DOHSA”).AnditnotedthattheDOHSAprecludesrecoveryofnonpecuniarydamages.Thetrialcourtrejectedthisargument.

JCIalsomovedtoexcludeevidencethatthedecedentworkedwithJCIgaskets.Thetrialcourtrejectedthisargument.

Finally,theplaintiffarguedthatJCI’sexpert—whowasunabletotietheuseofasbestostoanyoftheshipsonwhichdecedentworked—couldnotspeculateaboutotherasbestos-containingproductstowhichthedecedentmighthavebeenexposed.Thetrialcourtgrantedplaintiff’srequest.

Thejuryreturnedalargeverdictfortheplaintiff,partofwhichincludedanawardfornonpecuniarydamages.

Ruling:Onappeal,theSCOVreversedthetrialcourt’s“sea-man”rulingbutaffirmeditsrulingadmittingevidencethatdecedentworkedwithJCIgaskets.

TheSCOVagreedwithJCIthatdecedentwasaseaman.ItcitedUnitedStatesSupremeCourtprecedentsthatdefined“sea-man”asonewhocontributedtothefunctionofthevesseloritsmissionandwhohadasubstantialconnectiontoavesselorgroupofvessels.TheSCOVobservedthatthedecedentcon-tributedtothemissionofthevesselsonwhichheservedandthathehadasubstantialconnectiontothosevessels.Thus,hewasa“seaman.”

ReviewingUnitedStatesSupremeCourtmaritime-lawprec-edents,theSCOValsoheldthatnonpecuniarydamageswerenotavailabletoa“seaman.”Thiswassowhethertheclaimant

wassuingundergeneralmaritimelaw,undertheJonesAct,orundertheDOHSA.Thus,thetrialcourterredinallowingplaintifftorecovernonpecuniarydamages.

TheSCOVrejectedJCI’sappealofthetrialcourt’sdecisiontoallowplaintifftointroduceevidenceofdecedent’sexposuretoasbestos.ItnotedthatJCI’sargumentonthisissuehadmorphedintoanargumentaboutthesufficiency,ratherthantheadmissibility,ofthisevidence.Becausetheadmissibilityissuewasnotbriefed,andthesufficiencyissuenotpreserved,JCIhadwaiveditsrighttoarguethesepoints.

Finally,theSCOVheldthatthetrialcourtproperlylimitedthetestimonyofJCI’sexpert.Becausetheexpertcouldnottietheevidencetoanyshipthatthedecedentactuallyworkedon,hisopinionsaboutdecedent’spossibleuseofotherasbestos-containingproductswasofmarginalvalue.Itwasnotanabuseofdiscretiontoexcludeit.

Key Holding(s):

• Forpurposesofmaritimelaw,a“seaman”isonewhocontributestothefunctionormissionofavesselandwhohasasubstantialconnectiontooneorotherves-sels.

• Nonpecuniarydamagesarenotavailabletoaseaman’sdecedentwhobringsanactionundertheDeathontheHighSeasAct,undertheJonesAct,orundergeneralmaritimelaw.

F F F

InsuranceCase: Christy v. Mercury Casualty Co., Record No.

102138(3/2/2012)Author: KoontzLower Ct.: WashingtonCounty(Lowe,C.Randall)disposition: Affirmed

Facts: Apoliceofficerwasinjuredinawork-relatedcaraccident.Theofficerobtainedsomeworkers’compensationbenefitsfortheinjuries,buttheworkers’-compensationinsurerrefusedtopayforacertainsurgicalprocedure,deemingittobeapre-existingcondition.Theofficerthensuedtheinsurerofhistwopersonalvehicles.Theinsurerrefusedtopay,citingaprovisionstatingthattheinsurancedidnotapply“tobodilyinjurysustainedbyanypersontotheextentthatbenefitsthere-for[]areinwholeorinpartpayableunderany[workers’]com-pensationlaw.”

Theofficersuedtheinsurer,butthetrialcourtheldthattheworkers’-compensationexclusionapplied--evenastothoseinjuriesthattheworkers’compensationinsurerrefusedtopay.

Ruling:Onappeal,theSCOVaffirmed.Itrejectedtheoffi-cer’sargumentthatthe“totheextent”languageoperatedmere-lyasabartodoublerecovery.Instead,itheldthatthelanguagemeantthattherewasnocoveragewhatsoeverforclaimsthat

38

LitigationNews Summer2012werepayableunderworkers’compensationlaw--eveniftheworkers’compensationcarrierrefusedtopayfortheinjuriesinquestion.Thiswasalimitationonthescopeofcoverage,notalimitationontheamountofcoverage.

JusticePowell,joinedbyJusticeMilletteandJusticeMims,concurredinpartanddissentedinpart.

Key Holding(s):

• Acar-insurancepolicyprovisionthatexcludescover-ageforinjuries“payable”underworkers’-compen-sationlawappliestoworkplaceinjurieseveniftheworkers-compensationcarrierrefusestopayforcer-taintreatmentsthattheinsuredclaimedwererelatedtotheaccident.

F F F

Civil ProcedureCase: Bowman v. Concepcion, Record No. 102144

(3/2/2012)Author: KoontzLower Ct.: WiseCounty(Kilgore,JohnC.)disposition: Affirmed

Facts: Inamedical-malpracticecase,theplaintifffailedtoobtainservicewithinoneyearoffilinglawsuit.Heobtainedanexparteorderthat(1)declaredthattheplaintiffhadshowngoodcauseforthedelayand(2)purportedtoextendthetimeforservice.Onceserved,thedefendantmovedtodismissthecase,explainingthathehadbeenworkinginWiseCountyandtheCityofNortonduringallrelevanttimesandtheplaintiffeasilycouldhavefoundhim.Thedefendantalsoarguedthattheearlierexparteorderwasvoid,notmerelyvoidable.

Theplaintiff,however,statedthatitwasnottheunavailabilityofthedefendantthatmadeservicedifficult.Rather,itwasplaintiff’sinabilitytofindanexpertwhocouldprovidethecertificationrequiredbyVa.Code§8.01-20.1inmedical-malpracticecases.

Thetrialcourtfoundthattheorderextendingtheservicedead-linewasvoid,notsimplyvoidable.Anditheldthattheplain-tiffhadfailedtoshowtherequisiteduediligenceunder§8.01-275.1andRule3:5(e).Inparticular,itheldthatthedefendantwasreadilyaccessibleduringtherelevantperiod.Theplain-tiff’sinabilitytolocateanexpertdidnotexcuseherfailuretoobtaintimelyserviceonthedefendant.Accordingly,thetrialcourtenteredfinaljudgmentagainsttheplaintiff.

Ruling:Onappeal,theSCOVaffirmed.Asaninitialmatter,however,itrejectedthetrialcourt’sfindingthattheexparteorderwasvoid,notsimplyvoidable.Eventhoughthestatuedidnotauthorizeit,thetrialcourtstillhadjurisdictiontoenterit.

Onthemerits,however,theSCOVagreedwiththetrial-courtrulingthattheplaintiffhadnotshownduediligence.TheSCOVrejectedtheplaintiff’sargumentthat§8.01-20.1’s

requirementforexpertcertificationclashedwith§8.01-275.1’srequirementthatplaintiffservedefendantwithinoneyearoffil-ingsuit.Rather,itheldthatthetwostatuteswere“complemen-tary”andthattheirpurposeswouldbefrustratedifaplantiffcouldindefinitelydeferservicebecauseitwasunabletofindasuitableexpert.The“duediligence”requiredbyVa.Code§8.01-275.1relatestoduediligenceinservingthedefendant,notduediligenceinlocatinganexpert.

JusticePowellfiledaconcurringopinion.

Key Holding(s):

• Atrialcourtmaynotprospectivelyextendaplaintiff’stimeforobtainingserviceonadefendant.Butsuchanimproperextensionisvoidable,notvoid.

• ForpurposesofCode§8.01-275.1’sone-yearservicerequirement,apartydoesnotexerciseduediligencewherethedefendantisreadilyavailabletobeserved,buttheplaintiffcannotlocateamedical-malpracticeexpertwillingtocertifythecaseunderVa.Code§8.01-20.1.

F F F

Civil ProcedureCase: Wakole v. Barber, Record No. 102176(3/2/2012)Author: PowellLower Ct.: FairfaxCounty(Ney,R.Terrence)disposition: Affirmed

Facts: Inclosingargumentinapersonal-injurysuit,theplain-tiff’sattorneypresentedacharttoexplaintheplaintiff’sdam-agesrequest.Thechartitemizedcategoriesofdamagesandprovidedasuggesteddamagesvalueforeachitem.Thechartthentotaledtheseestimatestoarriveatatotaldamagesamount.Thedefendantobjectedtotheplaintiff’suseofthischart,con-tendingthatitinvadedtheprovinceofthejuryandviolatedVa.Code§8.01-379.1.Thetrialcourtoverruledthisobjectionandallowedplaintiff’scounseltousethechartinherclosingargu-ment.

Ruling:Onappeal,theSCOVaffirmed.Althoughaplaintiffmaynotinvitethejurytoperformaperdiemestimateofnon-economicdamages,thatdoesnotmeanaplaintiffcannotbreakdowndamagesintotheircomponentparts(providedtheevi-dencesupportsthedamagesclaims).

TheSCOValsorejectedtheplaintiff’sargumentthat§8.01-379.1,byallowingapartytostatetheamountsuedfor,limitssuchdiscussiontoasinglenumber.Itheldthattherewasnoth-inginthestatutestatingthataplaintiffmayonlypresenttheamountsuedforonlyasalumpsum.

Key Holding(s):

• Inclosingargument,aplaintiffmaybreakdownadamagesrequestintoitscomponentparts,providedthereisevidencetosupporteachdamagescategory

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identifiedinthebreak-down.

F F F

Business TortsCase: Collelo v. Geographic Services, Inc., Record No.

101411(3/2/2012)Author: LemonsLower Ct.: FairfaxCounty(Ney,R.Terrence)disposition: Aff’dinPart,Rev’dinPart

Facts: AnemployeeofGeographicServices,Inc.(“GSI”),a“geonames”company,wenttoworkforBoeing.WhileatBoeing,theemployeeworkedongeonames-relatedprojectsandcreatedsoftwaretoolssimilartothoseonwhichheworkedatGSI.GSIsuedtheemployeeandBoeing,claimingbreachofcontract,violationoftheTradeSecretsAct,andtortiousinter-ferencewiththeemployee’scontract.

Attrial,GSIpresentedevidenceregardinghowmuchGSI’svaluehaddecreased,GSI’scostindevelopingthestolentradesecrets,Boeing’sunjustenrichment,andwhatreasonableroyal-tiesfortheinformationwouldbe.

Thetrialcourtgrantedthedefendants’motiontostrike.Itheldthat(1)theemployeedidnotbreachthenon-solicitationprovi-sioninthecontractbecauseGSIandBoeingdidnotdirectlycompeteagainsteachother,(2)GSIpresentednoexpertevi-dencetoestablishcontractdamages,(3)GSIcouldnotrecoverboththecosttodeveloptradesecretsandthelossofvalueoccasionedbytheirmisappropriation,asthatwouldamounttoadoublerecovery,(4)GSIcouldnotrecoverdamagesforlossoftradesecretsbecausethetradesecret’svaluehadnotbeendiminishedandthetradesecretwasnotdivulgedtothirdpar-ties,and(5)GSIcouldnotrecoverpunitivedamagesbecausetherewasinsufficientevidenceofwillfulormaliciousconduct.

Theemployeealsosoughtattorney’sfeesunderacontractualprovisionthat,heclaimed,entitledhimtothem.Thetrialcourtdidnotawardhimthosefees.


Tobeginwith,itreversedthetrialcourt’sdecisionregard-ingtradesecrets.ThetrialcourthadopinedthattheplaintiffcouldnotestablishanydamagesbecauseGSIandBoeingdidnotcompeteinthesamemarket.TheSCOVrejectedthisargument,andheldthatapartycanbringanactionundertheTradeSecretsActevenifitisinadifferentfieldfromthedefendant.Thetestformisappropriationofatradesecretdoesnotrequirethattheoffenderusethesecrettocompetewiththevictim.ThefactthatBoeingusedtheemployee’sknowledgeofGSI’sgeonamestradesecrets,andthatitdidsoknowingoftheemployee’sconfidentialityobligations,wassufficienttoestab-lishmisappropriation.Becausethetrialcourt’srulingregard-ingdamagesreliedonthefalseassumptionthatGSIneededtoestablishcompetitiveharm,theissuehadtoberemandedtothetrialcourt.

Onthebreach-of-contractandtortious-interferenceclaims,however,therewasinsufficientevidenceofdamagesforthoseclaimstogotothejury.Althoughsomeofthewitnesses’tes-timonywaspotentiallyrelevanttothoseclaims,GSIoffereditonlytosupportitstrade-secretsclaims,notitscontractandtortious-interferenceclaims.

Finally,theSCOVrejectedtheemployee’srequestforattor-ney’sfees,notingthattheattorney’sfeesprovisioninthenonsolicitationagreement--theagreementinquestion--allowedonlytheemployertorecoverattorney’sfees.Itdidnotprovideattorney’sfeestoaprevailingemployee.

JusticeMcClanahanconcurredinpartandreversedinpart.

Key Holding(s):

• InaclaimundertheVirginiaTradeSecretsAct,aplaintiffneednotshowthatthewrongdoerusedthetradesecrettocompetewiththevictim.

• TheVirginiaTradeSecretsActallowsanaggrievedpartytorecoverfortypesoflossesotherthancompeti-tiveharm.

• Inanappropriatecase,aplaintiffundertheTradeSecretsActcanestablishdamagesbyshowingwhatreasonableroyaltieswouldhavebeenorbyshowingwhatitcosttheplaintifftodevelopthosesecrets.

F F F

Civil ProcedureCase: Bing v. Haywood, Record No. 102270(3/2/2012)Author: LemonsLower Ct.: MiddlesexCounty(Long,R.Bruce)disposition: Affirmed

Facts: OnMay28,2008,theplaintiffwasarrestedandtransportedtotheMiddlePeninsulaRegionalSecurityCenter.Whilethere,shewassubjectedtoabody-cavitysearch.OnMay21,2010,theplaintiffbroughtsuitagainstthepersonswhoconductedthesearch,allegingassaultandbattery,illegalsearch,andintentionalinflictionofemotionaldistress.

Defendantsfiledapleaofthestatuteoflimitations,arguingthatplaintiff’sclaimsaroseoutofthe“conditionsofherconfine-ment”andsoweretime-barredunderVa.Code§8.01-243.2’sone-yearlimitationsoninmateclaims.Thetrialcourtsustainedtheplea.

Ruling:Onappeal,theSCOVaffirmed.Code§8.01-243.2statesthatasuit“relatingtotheconditionof[adetainedper-son’s]confinement”mustbefiledwithinoneyearafterthecauseofactionaccruesorsixmonthsafteralladministrativeremediesareexhausted.

TheSCOVheldthattheplaintiff,apre-trialdetainee,was“con-fined”inastateorlocalcorrectionalfacility.Andsearchinganinmateforcontrabandisrelatedtotheconditionsofconfine-

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LitigationNews Summer2012ment.Soplaintiff’ssuitwasbarredby§8.01-243.2.

Key Holding(s):

• Code§8.01-243.2’sone-yearlimitoninmateclaimsappliestopre-trialconfinements.

• Aclaimarisingoutofabodycavitysearchforcontra-bandrelatestotheconditionsofconfinement,andsoisgovernedby§8.01-243.2.

F F F

Attorney General InvestigationsCase: Cuccinelli v. Rector and Visitors of the University

of Virginia, Record No. 102359(3/2/2012)Author: MilletteLower Ct.: AlbemarleCounty(Peatross,PaulM.,Jr.(Judge


Facts: ThestateAttorneyGeneralissuedtwo“CivilInvestigativeDemands”(“CID”)totheUniversityofVirginia(“UVA”)pursuanttoVirginia’sFraudAgainstTaxpayersAct,Code§§8.01-216.1to-216.19(“FATA”).ThisstatuteallowstheAttorneyGeneraltoissueCIDsagainstany“person.”FATAdefinespersonas“anynaturalperson,corporation,firm,association,organization,partnership,limitedliabilitycompany,businessortrust.”Code§8.01-216.2.TheAttorneyGeneralclaimedthatUVAwasa“person”becauseitwasa“corpora-tion”establishedbytheCommonwealth.

ThetrialcourtheldthatUVAwasa“person”underFATA,butthattheCIDthattheAttorneyGeneralissuedfailedtoade-quatelystatethenatureoftheconductthatallegedlyviolatedFATA.

Ruling:Onappeal,theSCOVaffirmed--butondifferentgrounds.TheSCOVnotedthatUVAwasanagencyoftheCommonwealth.Citingvariouscanonsofstatutorycon-struction,theSCOVconcludedthatFATAdidnotautho-rizetheattorneygeneraltoissueCIDstoagenciesoftheCommonwealth.Thus,theAttorneyGenerallackedtheauthor-itytoissueaCIDtoUVA.

Key Holding(s):

• Virginia’sFraudAgainstTaxpayersActdoesnotauthorizetheAttorneyGeneraltoissuecivilinvestiga-tivedemandstoauniversitythatisanagencyoftheCommonwealth.

F F F

Civil ProcedureCase: Galumbeck v. Lopez, Record No. 102416

(3/2/2012)Author: PowellLower Ct.: CityofVirginiaBeach(Hanson,EdwardW.,Jr.)disposition: Affirmed

Facts: Thiswasamedical-malpracticewrongful-deathclaimagainstaplasticsurgeoninwhichplaintiff’sdecedentdiedfromaspirationpneumoniasecondarytothesurgery.Theplaintiffpresentedevidencethatwhenthedecedentbegantosufferpain,fever,andseveredizzinessafterthesurgery,thedecedent’ssisterspoketoanurseatthesurgeon’soffice,butthatthenursetoldherthatthesesymptomswerenormal.Decedentdiedlaterthatday.

Attrial,thedefendantsoughttopresenta“surgicallog”that,heclaimed,establishedthatthenurseinquestioncouldnothaveansweredthecall.Healsosoughttointroduceunpaidmedicalbillsthatshowedthatplaintiffdidnotpayforthesurgery.Thetrialcourtdeniedbothmotions.Butitallowedtheplaintifftopresentevidenceofthebillsthemselves.

Attrial,theplaintiffpresentedevidenceshowingthattheanes-thesiologistwasnotboard-certified.Plaintifflikewisesoughttointroduceacopyofthedefendant’swebsite,whichfalselystatedthatthedefendantusedonlyboard-certifiedanesthesiolo-gists.Thedefendantobjectedtothis,butthetrialcourtadmit-teditintoevidence.

Finally,thedefendantclaimedthattherewasjurormisconductinasmuchasajurorshookthehandofoneofplaintiff’sexpertsandtoldhim“goodjob.”Whenquestionedinchambers,how-ever,thejurortestifiedthatthiswouldnotimpairhisabilitytojudgethecaseimpartially.

Thejuryreturnedaverdictfortheplaintiff.


Onthejuror-misconductissue,itheldthatthedefendantboretheburdenofestablishingthejuror’slackofimpartiality,yethadnotdoneso.Thejurortestifiedthathecouldremainimpartial.Asthedefendantofferednoevidencetocounterthis,theSCOVaffirmedthetrialcourt’srefusaltodeclareamistrialonjuror-misconductgrounds.

TheSCOValsorejectedtheassignmentoferrorregardingthetrialcourt’srefusaltoletdefendantintroducethesurgicallog.Itnotedthatthegroundsforthisrulingandcounsel’sargumentsonthepointwerenotincludedintherecord.Althoughthedefendantlatersoughtto“proffer”whattheargumentswere,andwhattheevidencewouldhavebeen,thiswasdoneafterthecourthadadjournedforthedayandoutsidethepresenceofopposingcounsel.Becauseopposingcounseldidnotacquiesceinorstipulatetothemattersdiscussedindefendant’spurported“proffer,”thisprofferdidnotpreservedefendant’sarguments.

TheSCOVsimilarlyheldthatthedefendantfailedtopreservehisobjectionstotheintroductionofevidenceregardingdefen-dant’suse,velnon,ofonlyboard-certifiedanesthesiologists.Althoughheraisedthematterinapre-trialmotioninlimine,heneveraskedtocourttoruleonthematter.Andwhenheobject-edattrialtotestimonyregardingtheanesthesiologist,themat-

41

LitigationNews Summer2012terwasdiscussedinasidebarconferencemadeofftherecord.Finally,withrespecttothecontentsofthewebsite,theSCOVnotedthatthedefendanthimselfhadintroducedthewebsiteasanexhibit.Becausethedefendanthadintroducedevidenceoflikekindtothataboutwhichheobjected,theSCOVheldthatthedefendanthadwaivedanyobjectionshemighthavehadconcerningtheprintout.

Finally,theSCOVheldthatthetrialcourtdidnoterrinallow-ingplaintifftointroducemedicalbillsbutdenyingthedefen-dant’srequesttopresentdocumentsshowingthatthosebillshadnotbeenpaid.TheSCOVheldthatplaintiffintroducedthemedicalbillstoshowthedefendant’sgreed,nottorecoverforthecostofmedicalbills.And,inanyevent,thedefendantwasallowedtotestifythathewasneverpaidfortheprocedure.

Key Holding(s):

• Topreserveargumentsforappeal,aunilateralprof-fermustbeacquiescedinorstipulatedtobyopposingcounsel.Aunilateralproffermadeafterthecourthasadjournedforthedayandoutsidethepresenceofopposingcounseldoesnotpreserveanargumentforappeal.

• Argumentsandrulingsmadeofftherecordinaside-barconferencearenot,withoutmore,preservedforpurposesofappeal.

• Apartywhointroducesevidenceoflikekindtotheevidencetowhichheobjectshaswaiveditsobjectiontotheopposingparty’sintroductionofthatevidence.

F F F

Civil ProcedureCase: Gerald T. Dixon, Jr., L.L.C. v. Hassell & Folkes,

P.C., Record No. (3/2/2012)Author: MimsLower Ct.: CityofChesapeake(Smith,RandallD.)disposition: Affirmed

Facts: Apropertyownerbroughtanactionagainstasur-veyor,claimingthatthesurveyorerredinmarkingthebound-arylinesoftheowner’sproperty.ThesurveyorcompletedtheworkinMarch2006,butdidnotfilesuituntilAugust2009.Theownerclaimedthathisactionwasforbreachofawrittencontract,subjecttoafive-yearstatuteoflimitations.Thesur-veyor,however,claimeditwasanoralagreement,governedbyathree-yearlimitationsperiod.

TherecordshowedthatthesurveyorhadsentDixonawrit-tenproposal,invitingDixontoacceptitstermsbysigningandreturningit.Theproposalstatedthatitwouldbecomethepar-ties’writtencontractifDixonexecutedit.Dixonneverdidso,butthesurveyorperformedtheworkanyhow.

Thetrialcourtheldthattheunexecutedproposalwasnotawrit-tencontract,andthattheonlycontractwasanoralagreement

betweentheparties.

Ruling:Onappeal,theSCOVaffirmed.ItagreedthatDixonhadacceptedthetermsoftheproposalasthetermsofthecon-tractwiththesurveyor.AnditagreedthatDixon’sfailuretosigntheproposaldidnotpreventtheformationofacontractbetweentheparties,onthetermslaidoutintheproposal.But,theSCOVheld,thisdidnotmeanthattheunexecutedproposalwasawrittencontractforpurposesofCode8.01-246(2).

Amongotherthings,theproposalrequiredDixontosignandreturnit,andstatedthattheexecutedagreementwouldserveastheparties’writtencontract.BecauseDixondidnotsatisfytheexecutionrequirement,thedocumentdidnotserveasawrittenagreement.

JusticeMcClanahanfiledadissentingopinion.

Key Holding(s):

• Acontractproposalthatstatesthatitwillbetheparties’writtencontractupontherecipient’sexecu-tionofitisnota“writtencontract”forpurposesof8.01-246(2)’sfive-yearlimitationsperiodwheretherecipientfailstoexecuteit.Thisisso,evenifthepar-tiesotherwiseoperateunderthetermssetforthintheunexecutedproposal.

F F F

DefamationCase: Askew v. Collins, Record No. 110323(3/2/2012)Author: McClanahanLower Ct.: CityofWilliamsburg(Ford,WalterJ.)disposition: Affirmed

Facts: Theplaintiffinthisdefamationactionformerlyworkedinthedrugcourtoverwhichthedefendant,aformercircuitcourtjudge,presided.Theplaintifffiledasexualharass-mentclaimagainsttheformerjudge,andthemattersettled.

Whentheformerjudgewasbeingconsideredforreappoint-ment,newsoftheclaimsurfaced.Respondingtoareporter’squestion,theformerjudgesaidthat“Collins[theplaintiff]wasinstitutionalized.”Althoughthenewspaperdiscussedthequoteinternally,itdidnotpublishit.Itdid,however,publishcertainotherstatementsthattheplaintiffallegedweredefamatory.Theplaintiffsettledwiththenewspaperandanotherco-defendantfor$120,000.

Thecasethenwenttotrialagainstthejudge.Thetrialcourtinstructedthejuryonpersedefamation--aninstructiontowhichtheformerjudgedidnotobject.Theformerjudgealsodidnotarguethattheevidencewasinsufficienttoestablishpersedefamation.Thejuryreturneda$350,000verdict,basedontheformerjudge’sstatementthattheplaintiffhadbeeninstitu-tionalized.Thetrialcourtrefusedtooffsetthisawardbythe$120,000settlementwiththeco-defendants.

Ruling:Onappeal,theSCOVaffirmed.Theformerjudge

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LitigationNews Summer2012arguedthattherewasinsufficientevidenceofdamagestosup-porta$350,000verdict,asthenewspaperhadnotincludedtheinstitutionalizationremarkinthestory.ButtheSCOVheldthatincasesinvolvingpersedefamation,damagesarepresumedandtheplaintiffneednotseparatelydemonstratethem.Asthedefendanthadnotobjectedtothedefamationperseinstruction,thejurycouldpresumedamages.

TheSCOVlikewiserejectedtheformerjudge’sargumentthat,underCode§8.01-35.1,the$350,000awardhadtobeoffsetbythe$120,000recoveredfromthecodefendantsbeforetrial.Thissettlementdidnotinvolve“thesameinjury.”Thesolebasisforthejury’sawardagainstthejudgewasthe“institution-alized”remark,andplaintiffdidnotallegethatanyoftheco-defendantsrepublishedthisstatement.Becausethesettlementconcernedadifferentinjuryfromtheinjuryforwhichthejuryheldtheformerjudgeliable,theSCOVheldthat§8.01-35.1didnotapply.

Key Holding(s):

• Inacaseinvolvingpersedefamation,reputationaldamagesarepresumedandtheplaintiffneednotpres-entseparatedamagesevidenceofit.

• AdefendantisnotentitledtoanoffsetunderCode§8.01-35.1foraplaintiff’spriorsettlementwithotherco-defendantswheretheinjuriesforwhichthecourtfounddefendantliabledifferedfromtheonesallegedlycausedbythesettlingco-defendants.

F F F

Civil ProcedureCase: Specialty Hospitals of Washington, LLC v. Rap-

pahannock Goodwill Industries, Inc., Record No. 102196(3/2/2012)

Author: KinserLower Ct.: CityofFredericksburg(Willis,GordonF.)disposition: Affirmed

Facts: Theplaintiffenteredintoacontractwithdefendantunderwhichtheplaintiffwouldsupplythedefendantwithlinenandlaundryservices.Theplaintiffallegedthatthedefendantfailedtopayforthoseservices,andsofiledsuittorecovertheamountsowed.Thedefendantwasanout-of-statecor-poration,sotheplaintiffeffectedsubstitutedservicethroughtheSecretaryoftheCommonwealth.TheSecretaryoftheCommonwealthfiledacertificateofcompliance,indicatingthatithadforwardedthecomplainttothe“CorporationTrustCompany,”thedefendant’sdesignatedagentinDelaware.

Thedefendantfailedtoappearwithin21days,sotheplain-tiffmovedforadefaultjudgment.Thetrialcourtgrantedthismotion,andenteredfinaljudgmentagainstthedefen-dant.Within21daysofthisjudgment,thedefendantfiledamotiontosetasidethedefaultjudgmentunderRule3:19(d)(1).ThedefendantacknowledgedthattheSecretaryofthe

CommonwealthsenttheprocesstothecorrectDelawareaddressbutclaimedthattheregisteredagentneverforwardedtheprocesstoit.Findingthatservicewasproper,thetrialcourtrefusedtosetasidethedefaultjudgment.

Ruling:Onappeal,theSCOVaffirmed.Itheldthatthedeci-siontosetasideadefaultjudgmentunderRule3:19(d)(1)restsinthesounddiscretionofthetrialcourt.Evenifallthecon-siderationsnotedintheruleweremet,atrialcourtstillcouldrefusetosetasidethedefault.

TheSCOValsorejectedthedefendant’sargumentthat,inordertodenyamotiontosetasideadefaultjudgment,thetrialcourtneededtomakeexplicitfindingsastoallthefactorsmentionedinRule3:19(d)(1).Whiletherewasauthoritytotheeffectthatatrialcourtmustdosowhengrantingamotiontosetasideadefaultjudgment,therewasnosuchrequirement--eitherintheRulesorinthecaselaw--thatatrialcourtmustsuchfindingswhendenyingamotiontosetasideadefaultjudgment.

Key Holding(s):

• WhendenyingaRule3:19(d)(1)motiontosetasideadefaultjudgment,thetrialcourtneednotmakeexplicitfindingsastoallthefactorsmentionedintherule.

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InsuranceCase: First American Title Insurance v. Western Surety

Co., Record No. 111394(3/2/2012)Author: LemonsLower Ct.: U.S.CourtofAppeals(FourthCircuit)disposition: CertifiedQuestionAnswered

Facts: Theownerofrealestatewishedtorefinance.Theclosingagentobtaineda$100,000bondfromSurety,asrequiredundertheVirginiaConsumerRealEstateSettlementProtectionAct(“CRESPA”).Theclosingagent’semployeeabscondedwithfundsthattheBankhadsuppliedtopayofftheoriginalmortgagesontheproperty.ThisputtheBankbehindtheoriginaldeedoftrustinorderofpriority.Theownerdefaultedandtheholderoftheorginaldeedoftrustforeclosed.Theownerdeclaredbankruptcy,leavingtheBankwitha$734,296.09loss.

TheTitleInsurancecompanypaidofftheBank’sloss.TheTitleInsuranceCompanythensuedtheclosingagent’sSuretytorecoverthe$100,000policyamount.ThedistrictcourtheldthattheTitleInsuranceCompanycouldmaintainacommon-lawclaimagainstthesuretybondandgrantedsummaryjudg-mentinTitleInsuranceCompany’sfavor.

Ruling:TheSCOVheldthatCRESPAdidnotcreateaprivaterightofactiontoenforceitsterms.CRESPA’senforcementprovisionsonlyauthorizedstatelicensingauthoritiestofineorpenalizepersonswhofailtocomplywithit.

Nevertheless,theSCOVheldthatprivatepartiescould,con-sistentlywithCRESPA,maintainanactionagainstthebond.

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LitigationNews Summer2012NothinginCRESPAabrogatedcommon-lawcontractclaimsagainstthebond.

Finally,theSCOVheldthattheTitleInsurancecompany--thoughlackingstandinginitsownright--could,astheBank’ssubrogee,bringsuitagainsttheSurety.ThepurposeoftheCRESPA-mandatedbondwastoprotectparticipantsinthesettlementtransaction,includingbanks.

Key Holding(s):

• ThereisnoprivaterightofactiontoenforcethetermsofCRESPA.

• Apartycan,consistentlywithCRESPA,maintainacommon-lawcontractactionagainsttheCRESPA-mandatedbond.

• ThesubrogeeofabankinvolvedinaCRESPA-coveredtransactioncanbringaclaimagainsttheCRESPA-mandatedbond.

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Civil ProcedureCase: Casey v. Merck & Co., Inc., Record No. 111438

(3/2/2012)Author: GoodwynLower Ct.: U.S.CourtofAppeals(SecondCircuit)disposition: CertifiedQuestionAnswered

Facts: AputativeclassactionwasfiledregardingoneofMerck’sproducts.Thefederaldistrictcourtultimatelydeniedclasscertification.Plaintiffsthenfiledadiversityclaiminfed-eralcourt,assertingindividualclaimsregardingthesamedrug,buttheyfiledafterVirginia’stwo-yearpersonal-injurylimita-tionperiodhadexpired.

Merckmovedforsummaryjudgmentonstatute-of-limitationgrounds.Theplaintiffs,however,claimedthattheiractionwastolledbythependencyoftheputativeclassaction.ThedistrictcourtrejectedthisargumentandgrantedMerck’ssummary-judgmentmotion.Onappeal,theSecondCircuitcertifiedques-tionsregardingwhether,giventheputativeclassaction,equi-tabletollingorstatutorytollingrenderedtheplaintiffs’claimstimely.

Ruling:TheSCOVheldthatneithertollingtheoryapplied.

Onthequestionregardingequitabletolling,theSCOVheldthatstatutesoflimitationsmustbeappliedaccordingtotheirtermsunlesstheGeneralAssemblyhasclearlycreatedanexceptiontothem.Astherewasnostatutoryexceptionthattolledclaimswhilearelatedclassactionwaspending,theSCOVheldthatequitabletollingdidnotapply.

TheSCOValsoheldthattherewasnotollingunderCode§8.01-229(E)(1),theprovisionthatallowstollingforaprevi-ouslyfiledcase.AlthoughtheSCOVacknowledgedthatcasesfromotherjurisdictionscantollthestatute,itheldthatthe

subsequentactionmustbefiledbythesamepartywhofiledthepreviousaction.

Theonlywaythatthetwoactionscouldhavebeenfiledbythesamepersonwasiftheclassrepresentativesintheputa-tiveclassactionhadrepresentationalstandingtoenforcetheplaintiffs’rights.ButVirginiarecognizesnorepresentationalstandingunlesstheGeneralAssemblyspecificallyauthorizesit.TheGeneralAssemblyhasnotrecognizedaclassrepresentativeashavingrepresentationalstandingforunnamedmembersofaputativeclass.Astheplaintiffswerenotnamedpartiesintheearlierclassaction,thatactionwasanullityastothemandsotheputativeclassactiondidnottollthelimitationsperiod.

Asnoneoftheplaintiffswasanamedplaintiffintheputativeclassaction,Code§8.01-229(E)(1)didnotapplytotolltheirclaims.

Key Holding(s):

• VirginialawdoesnotallowtollingofthestatuteoflimitationsexceptwheretheGeneralAssemblyspe-cificallyauthorizesit.

• Code§8.01-229(E)(1)doesnottollthelimitationsperiodforunnamedmembersofaputativeclassinaclass-actionsuit.

F F F

JAnUARY SESSIon 2012 Constitutional LawCase: Maretta v. Hillman, Record No. 102042

(1/13/2012)Author: KinserLower Ct.: FairfaxCounty(Devine,MichaelF.)disposition: Reversed

Facts: Afteradivorceandremarriage,thedecedentneglectedtoremovehisex-wifeasbeneficiaryofhisFederalEmployees’GroupLifeInsurance(FEGLI)policy.Uponhisdeath,hisex-wife--andnothiswidow--receivedthebenefits.

Uponadivorce,VirginiaCode§20-111.1(A)automaticallyrevokesabeneficiarydesignationfortheex-spousewhenthecoupledivorces.UnderthefederallawgoverningFEGLI,how-ever,thenamedbeneficiaryisentitledtothebenefitsevenifthenamedbeneficiaryisanex-spouseandevenifthedecedenthassinceremarried.

ThetrialcourtheldthatCode§20-111.1(A)appliedanditawardedthebenefitstothedecedent’swidow,nottohisex-wife.

Ruling:Onappeal,theSCOVreversed.ItheldthattheFEGLIprovisionsfordesignatingbeneficiariesconflictedwithVa.Code§20-111.1(A).Amongotherthings,FEGLIprovidesthatthenamedbeneficiaryonapolicytakesprecedenceover

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LitigationNews Summer2012anycourtorderofdivorce,unlesstheorderisreceivedbeforetheinsured’sdeath,whichdidnotoccurinthecaseathand.TheSCOVheldthatCode§20-111.1(A)frustratestheFEGLIprovision’spolicypreferencesfor(1)administrativesimplic-ity,and(2)respectingtheinsured’sactualchoiceofbenefi-ciary.BecauseCode§20-111.1frustratesandconflictswithCongress’intent,FEGLIpreemptsCode§20-111.1.

Key Holding(s):

• TheFederalEmployees’GroupLifeInsurancepro-visionconcerningeligiblebeneficiariespreemptsVirginiaCode§20-111.1.WhereFEGLIapplies,benefitsmustgotothenamedbeneficiary,eveniftheinsuredhaddivorcedandremarriedbeforehisorherdeath.

F F F

SanctionsCase: Northern Virginia Real Estate, Inc. v. Martin’s,

Record No. 101844(1/13/2012)Author: LemonsLower Ct.: FairfaxCounty(Thacher,Jonahan)disposition: Affirmed

Facts: Plaintiffreal-estatecompanyandbrokersuedanotherbrokeragefirmandthepropertyowner’srepresentatives,alleg-ingconspiracyanddefamation.Trialrevealedtheclaimstobewithoutfactualbasis.Plaintiffsnonsuited,andthetrialcourtgrantedanonsuit,thoughitsuspendedthejudgmentuntilitresolveddefendants’sanctionsmotion.Afterhearingadditionalevidence,thetrialcourtimposedlargesanctionsjointlyandseverallyagainstplaintiffsandplaintiffs’attorney.Thesanc-tionsorderwasenteredmorethan21daysafterthesuspendingorder.Afterthetrialcourtassessedsanctionsandliftedthesuspension,theplaintiffaskedthecourttosuspendthatordersothatitcouldprepareamotionforreconsideration.Thetrialcourtrefusedthatrequest.

Plaintiffsandherattorneyfiledseparateappeals.Theyarguedthat:(1)thetrialcourtlackedauthoritytosuspendthenonsuitorder,(2)thetrialcourterredinawardingsanctionsjointlyandseverally,(3)thetrialcourtabuseditsdiscretioninawardingsanctionsunder§8.01-271.1becauseitbaseditsconclusionthatplaintifflackedagood-faithfactualbasisforsuitonevi-dencerevealedattrialandduringsanctionshearing,and(4)thetrialcourterredindenyingplaintiffs’requestforahearingontheirmotiontosuspendthefinalorder.

Ruling:TheSCOVheldthatunderRule1:1,thetrialcourthadthepowertosuspendthenonsuit.Sothetrialcourthadjuris-dictiontoimposesanctions30daysaftergranting,butsuspend-ing,thenonsuit.

TheSCOVfurtherheldthatthetrialcourtdidnotabuseitsdis-cretioninimposingsanctions,asthefactsofthecasecouldnotsupportareasonablebeliefthatplaintiffs’claimsfortortiousinterference,conspiracy,anddefamationwerewell-groundedin

factorlaw.

Asforimposingsanctionsagainstbothattorneyandclient,theSCOVheldthatthetextof§8.01-271.1authorizestrialcourtstoimposesanctionsagainstbothapartyanditsattor-ney.Becausethetrialcourthadnowaytodeterminewho--asbetweenlawyerandclient--wasresponsibleforthesanctionedbehavior,itwasappropriateforittoimposesanctionsjointlyandseverally.Ifsanctionedpartieswishtoallocatesanctionsindividually,theybeartheburdenofcomingforwardwithinformationthatenablesthetrialcourttodoso.

Next,theSCOVheldthatthetrialcourtappropriatelybasedtheamountofthesanctionsawardondefendants’attorneys’feesandthattheamountsclaimedwerereasonable.

Finally,theSCOVheldthatthetrialcourtproperlyrefusedtoenterasuspendingordertoenabletheplaintiffstofileamotionforreconsideration,asRule4:15(d)permitsatrialcourttorefusetohearamotionforreconsideration.

Key Holding(s):

• Atrialcourtmaysuspendtheoperationofanonsuitorderformorethan21daysinordertotodisposeofasanctionsmotions.

• UnderVa.Code§8.01-271.1,atrialcourtmayimposesanctionsjointlyandseverallyagainstapartyanditsattorney.

• UnderRule4:15(d),atrialcourtneednothaveahear-ingonamotionforreconsideration.

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Estates and TrustsCase: Weedon v. Weedon, Record No. 101901

(1/13/2012)Author: PowellLower Ct.: KingGeorgeCounty(Willis,GordonF.)disposition: Reversed

Facts: Motheroffivechildrenwasdiagnosedwithcancerin2000.A2003willincludedagifttoherchurch,burialplotsforfourofherchildren,andgiftsofrealestateforthreeofthechil-dren.In2006,onedaughterleftherjobtobeabletocareforthemother.AfterquarrellingwithonesonatChristmas2006,themothertoldtheotherchildrenthatshewastakingthatsonoutofherwill.InMay2007,shecontactedthelawfirmwhodraftedtheoriginalwillandinstructedtheparalegalthatshewantedthesontakenoutofthewill,whichtheofficedid.

Ayearlater,themotherwasinthehospital.Beforesurgery,themotheraskedthecaretakerdaughtertocontactthelawyer’sofficeforadditionalchangestothewill--changesthat,withminorexceptions,wouldmakethecaretakerdaughterthesolebeneficiary.Aparalegalinthelawyer’sofficecontactedthemother,whorecognizedtheparalegal’svoice.Thetwowent

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LitigationNews Summer2012througheachitemofthe2007will,andthemotherstatedclear-lythatshewishedtochangeittogivethecaretakerdaughterallofherproperty(otherthantheburialplots).Theparalegaltestifiedthatthemother“knewwhatshewasdoingandwasdoingwhatshewanted.”Theparalegaldetectednosignsthatthemotherwasbeingcoerced.

Theattorneyfaxedtherevisedwilltothehospital,andthemothersigneditinthepresenceoftwopatientrepresentatives,asocialworker,andthecaretakerdaughter.Allthewitnessestestifiedeither(1)thattheyrecalledthemotherbeingclear-headedor,(2)thattheydidnotrememberspecifics,butknewtheywouldnothavesignedaswitnessesiftheyhaddoubtsaboutthemother’scapacitytounderstandthenatureofwhatshewasdoing.

Themotherdiedthenextday.

Thedaughterprobatedthe2008will,whichtheotherfoursiblingschallenged.Thechildrentestifiedthatthemotherwasconfusedatthetimeandwasinfluencedbythecaretakerdaughter.Thecaretakerdaughter,inturn,presentedevidencefromoneofthemother’sfriendswhostatedthat--thoughthemother’sbodywasweak--themothercouldrecognizeherfriendandcouldconverseaboutthefriend’srecenttravels.Thefriendalsotestifiedthatthemotherstatedclearlythatshewantedtohavehercaretakerdaughterreceiveallthatshehad.

Thetrialcourt,thoughacknowledgingthatthemotherhadperi-odsoflucidityin2008,heldthatthecaretakerdaughterfailedtoshowthatthemotherhadtestamentarycapacitywhensheexecutedthe2008will.Amongotherthings,thecourtnotedthatthelawyerhadnotspokentothedecedentdirectly--usingaparalegal,instead,tocollectinformationaboutchangestothewill.Accordingly,thetrialcourtheldthattheplaintifflackedcapacityin2008and,thus,the2007willcontrolled.

Ruling:Onappeal,theSCOVreversed.Itnotedthatthemother’scompliancewiththestatutoryrequirementsforvalidexecutionofawillgaverisetoapresumptionthatshehadtes-tamentarycapacity.But,inlightofthecontraryevidence,thecaretakerdaughterboretheburdenofshowingtestamentarycapacity.TheSCOVheldthatshemetthatburden.

First,theSCOVheldthatthetrialcourterredinemphasizingthefactthatthemother’slawyerdidnotspeakwithherdirectlywhen,in2008,heorchestratedthemodificationstothe2007will.Thelawyerleftthosedutiestoaparalegal.Thetrialcourtreliedonthisfacttoestablishlackoftestamentarycapac-ity.ButtheSCOVheldthattheparalegal’stestimonythatthemotherknewwhatshewasdoingandwasdoingwhatshewantedestablishedtestamentarycapacity.Italsofoundthatthetrialcourterredinfocusingonthefactthatitwasthecaretakerdaughter,notthemother,whoplacedthecalltothelawofficewhenthemotherwasinthehospital.Finally,theSCOVheldthatthetrialcourterredbyplacinggreaterweightonthetesti-monyoftheotherchildren,whowerenotpresentatthehospi-tal,thanonthetestimonyofpersonswhowereactuallyinthehospitalwhenthemothersignedthe2008will.

TheSCOValsorejectedtheotherchildrens’claimforundue

influence.Itagreedwiththetrialcourtthatapresumptionofundueinfluencearose,given(1)thefeeblenessofthemother,(2)thepositionoftrustthecaretakerdaughteroccupied,and(3)thefactthatthemotherstatedearlierthatshewishedtodisposeofherpropertydifferently.Butitheldthatthepartiesassertingundueinfluencestillneededtoshowactualundueinfluence.Todoso,thepartieschallengingthewillmustshowthattheinfluencewassoextensiveastocontrolthemindanddirecttheactionsofthetestator--i.e.,thetestatormustbeshowntohavenofreewill.Theburdenofestablishingundueinfluencefallsonthepartyassertingit.Thetrialcourt,however,nevermadeanyfindingsthatthemother’sfreewillwasovercomebythecaretakerdaughter.Accordingly,iterredinfindingundueinfluence.

JusticeMimsdissented,claimingthatthetrialcourt’sfindingofundueinfluencewasnotclearlywrong.

Key Holding(s):

• Partieschallengingawillonundue-influencegroundsmustshowthattheinfluencewassoextensiveastocontrolthemindanddirecttheactionsofthetestator.Thetestator,inessence,mustbeshowntohavenofreewill.

F F F

Workers’ CompensationCase: Redifer v. Chester, Record No. 101902

(1/13/2012)Author: GoodwynLower Ct.: AugustaCounty(McGrath,JohnJ.,Jr.)disposition: Affirmed

Facts: Plaintiffwasinjuredatsheepfarmwhenarmbecamecaughtinawool-manufacturingmachine.Theemployerdidnothaveworkers’compensationinsurance,butplaintiffwasstilleligiblefor--andreceived--aworkers’compensationaward.

Theemployeefiledalawsuitagainsttheemployers,thislawsuitwasalreadypendingatthetimeoftheworkers’compensationruling.Aftertheemployeereceivedtheworkers’compensa-tionaward,theemployermovedtodismisstheseparatelawsuit.Theplaintiffopposedthismotion,claimingthatanemployerwhofailstomaintainworkers’-compensationinsurancecannotavailitselfoftheAct’slimitationonliability,evenwheretheplaintiffreceivesafullawardintheworkers’compensationtri-bunal.Thetrialcourtdisagreed,anddismissedtheaction.

Ruling:Onappeal,theSCOVaffirmed.Code§65.2-307(A)statesthat“therightsandremedieshereingrantedtoanemployee...shallexcludeallotherrightsandremedies...onaccountofsuchinjury....”Itrejectedtheplaintiff’sargumentthatanemployerwhofailstomaintainworkers’-compensationinsuranceisbarredfrominvokingthissection.

Thesectiondealingwithuninsuredemployers,Code§65.2-805(A),givesaninjuredworkerthechoiceofeitherobtaining

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LitigationNews Summer2012aworkers’compensationawardorfilingalawsuit.Moreover,asinterpretedbytheSCOV,thestatutegivesinjuredemployeestherighttopursuebothremediessimultaneously.Butwhereaplaintiffsuccessfullyprosecutesaworkers’compensationclaim,iscollectingtheawardfromtheemployer,andisguar-anteedtorecoverthefullamountbytheUninsuredEmployersFund,theemployeecannotobtainasecondrecoveryinanactionatlaw.

Key Holding(s):

• Anemployeewhosuccessfullyprosecutesaworkers’compensationclaimagainstanuninsuredemployer--andwhoobtainsafinalcollectibleorder--maynotmaintainanactionatlawagainsttheemployerforthesameinjury.

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Land UseCase: Sinclair v. New Singular Wireless PCS, LLC,

Record No. 101831(1/13/2012)Author: MimsLower Ct.: AlbemarleCounty(Padrick,H.Thomas)disposition: Aff’dinPart,Rev’dinPart

Facts: Acountyordinancegavetheplanningcommissionthepowertograntwaiversfromrestrictionsotherwiseimposedbythezoningordinance.Itlimitedappealstotheboardofsuper-visorstoinstancesinwhichthewaiverwasdeniedorsubjectedtoconditionstowhichtheapplicantobjected.Itdidnotgiveadjoininglandownerstherighttoappealasuccessfulwaiverapplication.

Acellcarrierappliedforawaiverinordertoerectatransmis-siontower.Aneighboringlandownerunsuccessfullyopposedthewaiverattheplanning-commisionstage.Hethenbroughtanactionincircuitcourtseekingadeclarationthatthewaiverprovisionwasinvalid.HearguedthattheonlydeviationsfromzoningordinancesthattheCodepermitslocalitiestoalloware“variances”approvedbytheboardofzoningappealsandzoningmodificationsgrantedbythezoningadministrator.Theland-owneralsoarguedthatthewaiverprovisionunlawfullydeprivedhimoftherighttojudicialreview.Thetrialcourtrejectedtheseargumentsandheldthatthewaiverprovisionwaslawful.


Itdisagreedwiththeplaintiff’sargumentthatthewaiverwasreallyavarianceorzoningmodification,subjecttotherequire-mentsofCode§15.2-2309(2)and-2286(A)(4).Whereaprop-ertymaybedevelopedconsistentlywithanordinance,albeitonlyafterthelocality’sapprovaluponcertainconditionsbeingmet,avarianceisunnecessary.Thistypeofapprovalisa“spe-cialexception,”thepowertograntwhichtheGeneralAssemblyhasdelegatedtolocalities.

TheSCOVagreed,however,thatthecounty’sprocedurefor

reviewingwaiverapplicationswasnotauthorizedbystatelawandsoviolatedtheDillonRule.Thedelegationofthepowertograntordenywaiverswasinconsistentwiththegeneralfunctionofplanningcommissioners.Onlyzoningadministra-torsandboardsofzoningappealshavethepowertoauthorizedeparturesfromzoningordinances.Planningcommissions,bycontrast,areadvisorybodieswithnoexecutive,legislative,orjudicialpowers.

JusticeMcClanahandissentedinpart,statingthatshewouldreverseonbothgroundsassertedbytheappellantlandowner.JusticePowelljoinedthisconcurrenceanddissent.

Key Holding(s):

• Localitiescanadoptzoningordinancesthatallowaparticularusebutthatconditionapprovalontheland-ownerestablishingthatithasmetcertainconditions.

• Alocalitymaynotdelegateauthoritytograntordenywaiverstoanyentityotherthanthezoningadministra-torandboardofzoningappeals.

• Planningcommissionsareadvisorybodies,withnoexecutive,legislative,orjudicialpowers.

F F F

Land UseCase: Dykes v. Friends of the C.C.C. Road, Record No.

101630(1/13/2012)Author: KoontzLower Ct.: HighlandCounty(Franklin,HumesJ.)disposition: Reversed

Facts: Anunincorporatedassociationbroughtsuitagainstlandownersconcerningaccesstopropertytraversedbyagravelroadknownasthe“C.C.C.Road.”Theassociationclaimedthatthiswasapublicroadandthatthelandownerswrongfullyhadbarredaccessoverit.Thelandownersdeniedthis,assert-ingthattherewasnorecordofeither(1)ithavingbeendedi-catedtothepublicor(2)thegovernmenthavingadopteditintoitsroadsystems.

Thetrialcourtheldthattheassociationfailedtoestablishanexpressdedication.Italsoheldthattheconceptofimpliedacceptanceofaroadbyalocalitydoesnotapplytoruralroads.Anditheldthataprescriptiveeasementcouldnotbeestab-lishedinfavorofthegeneralpublic.Nevertheless,thetrialcourtheldthatalocality’s“recognition”ofalongandcontinu-oususebythegeneralpubliccouldestablishthepublic’sinter-estinusingtheroad.

Ruling:Onappeal,theSCOVreversed.Itagreedthattherewasnoexpressdedicationoftheroadbythepropertyownersandnoexpressacceptanceofitbythelocality.Anditalsoagreedthatthefactswereinsufficienttoestablishanimplieddedicationoracceptance.(Amongotherthings,therewasnoactionindicatingtheunmistakeableintentofthepropertyown-

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LitigationNews Summer2012erstopermanentlygiveuptheproperty.)Finallyitnotedthatthegovernment’sacceptanceofaruralroadmustbeformal.Asamatteroflaw,therecanbenoimpliedacceptanceofaruralroad.

Turningtothebasisforthetrialcourt’sfindingofapublicroad,however,theSCOVheldthatthetrialcourterredinfindingthattheroadwaspublicsimplybyvirtueofitslongandcontinuoususebythegeneralpublic.Thepubliccannotestablishaprescriptiveeasement,asanysuchputativeeasementlackstheessentialelementthattheclaimantassertstherighttotheexclusionofothers.Usebythegeneralpublicestablishes,atmost,alicensebytheownerpermittingtheuse.

Althoughlong-continueduseofaruralroadbythegeneralpublicmayestablishanimplieddedicationoftheproperty,itbecomesapublicroadonlyifthelocalitytakesanaffirmativesteptoacceptthededication.

Key Holding(s):

• Alocality’sacceptanceofaruralroadcannotbeimplied--thelocalitymustexpresslyacceptit.

• Long-continueduseofaroadbythegeneralpublicdoesnotestablisha“prescriptiveeasement”forpublicuseoftheroad.Atmost,itisevidenceofadedica-tion.Butadedicationisineffectivetocreateapublicroadwherethelocalityhasneveracceptedtheputa-tivededication.

F F F

Workers’ CompensationCase: Moore v. Virginia International Terminals,

Record No. 101408(1/13/2012)Author: PowellLower Ct.: CityofPortsmouth(Cales,JamesA.)disposition: Reversed

Facts: Awrongful-deathcasearoseoutofafatalaccidentattheVirginiaPortofAuthority(VPA).Thevictimandthetortfeasorwerebothstevedoreswhoworkedfordifferentcom-panies.ThetrialcourtheldthatdecedentandtortfeasorwerestatutoryemployeesoftheVPA,becausethetwofirmswereperformingtheVPA’swork.Althoughthevictim’semployerhadnotenteredintoanycontractwiththeVPA,ithadagreedtoabidebytheVPA’sscheduleofrates,whichthetorfeasor’semployerhaddrafted.Onthesefacts,thetrialcourtruledthatthetwoemployeeswereco-employees,andthattheplaintiff’swrongful-deathsuitwasbarredbytheWorkers’CompensationAct’sexclusivityprovision.

Ruling:Onappeal,theSCOVreversed.Itheldthatthetestsforstatutoryemployeeunder§65.2-302(A)presupposethattheowner/contractorhasenteredintoacontractwithanother.

Citingits2005decisioninHudson v. Jarrett,theSCOVfurtherheldthatmerelyagreeingtothescheduleofratesdidnotcreate

acontractforthevictim’sfirmtoprovidestevedoreservicesfortheVPA.Asthevictim’sfirmhadnocontractwiththeVPA,therewasnoco-employeerelationshipbetweentortfeasorandvictim.

Key Holding(s):

• Forpurposesofdeterminingco-employeestatusundertheWorkers’CompensationAct,theVirginiaPortAuthority’sscheduleofratesdoesnotcreateacontrac-tualrelationshipbetweentheAuthorityandthevari-ousfirmsperformingstevedoreservicesattheport.Accordingly,itdoesnotcreateaco-employeerelation-shipbetweenemployeesoftwostevedoreservices.

F F F

Sovereign ImmunityCase: Jean Moreau & Associates, Inc. v. Health Cen-

ter Commission for the County of Chesterfield, Record No. 101352(1/13/2012)

Author: MilletteLower Ct.: ChesterfieldCounty(Rockwell,FrederickG.,III)disposition: Affirmed

Facts: ChesterfieldCountycreateda“HealthCareCommission”tooperatenursing-home,hospital,andhealth-centerfacilities.Thecommissiontookoveranursinghome.Itexpandedthehometoincludeanassisted-livingfacility.Later,itdecidedtoaddanindependent-livingfacility.Thecom-missionawardedtheplaintiffafive-yearcontracttoplananddeveloptheindependent-livingfacility.Thecontractwassub-jecttoapprovalandratificationbythecommissioneachyear.

OnMay4,2006,thecommissionvotedtodiscontinuethecontract,effectiveJune30,2006.Itnotifiedtheplaintiff’spresidentofthisfactinwriting.Roughlyonemonthlater,theplaintiffsentaletterclaimingthatitwasowed“developmentfees.”OnJune19,2006,thecommissionwroteplaintiffandstatedthatitbelievedthatithadfairlycompensatedplaintiffforitswork,andrequestedthatplaintiffsubmittheamountowed,citingtherelevantcontractprovisionentitlingittosuchcom-pensation.Plaintiffsubmittednineinvoices,whichthecom-missionpaidonJuly31,2006.

Threemonthslater,theplaintiff--actingthroughcounsel--offeredtomediatetheremaining“deferreddevelopment”fees.OnJanuary3,2007,thecommissionsaiditdisagreedthatanyadditionalpaymentswererequired.Theplaintiffbroughtsuitapproximatelytwoweekslater.

Thetrialcourtsustainedthecommission’spleainbar.Itheldthattheplaintiff’scontractclaimwasbarredbytheProcurementAct’scontactual-claimsprocedure,asplaintiffdidnotfollowupherJune9,2006noticewithaclaimwithin60days,asrequiredbyCode§2.2-4363(C)(1).Anditheldthatthecommissionwasimmunefromplaintiff’squantummeruitclaimbecause,bydevelopingtheindependent-livingcommu-nity,thecommissionactedinagovernmentalcapacity.

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LitigationNews Summer2012Ruling:Onappeal,theSCOVaffirmed.ItheldthattheJuly31,2006paymentwasafinalpaymentforpurposesof§2.2-4363.Thus,plaintiffneededtofileaclaimwithin60daysofJuly31,2006.TheSCOVspecificallyrejectedtheplaintiff’sargumentthattheJuly31,2006paymentcouldnotbeafinalpaymentbecauseitcontainednostatementindicatingitwasthefinalpayment.TheSCOVheldthat“[n]othinginCode2.2-4363requiresapublicbodytogivenoticethatapaymentisfinalbeforethe60-daylimitationsperiodbeginstorun.”

TheSCOVheldthatplaintiffdidnotfileaclaimwithin60daysoftheJuly1,2006finalpayment.TheJune9,2006noticewasnota“claim”--itwas,atbest,anoticeofaclaim.AndeveniftheOctober4,2006lettercouldbeconstruedtobeaclaim,itcameaftertheexpirationofthe60-dayperiod.Thus,theSCOVheldthatthecontractclaimwasbarred.

Onthequantummeruitclaim,theSCOVheldthattheclaimwasbarredbysovereignimmunity.TheSCOVheldthatthecommissionwasamunicipalcorporation.Assuch,sovereignimmunityattachedtoits“governmental”functions,butnotits“proprietary”functions.

TheSCOVheldthatthecommissionactedinagovernmentalcapacityduringtheplanningfortheindependent-livingfacility,asthatfacilitywasanintegralpartofthecontinuumofcarethatthecountywishedtoestablishatthecenter.

Finally,theSCOVrejectedthecommission’sargument,oncross-appeal,thatitwasentitledtoabsoluteimmunity.Thecommissionhadarguedthatitwasentitledtoabsoluteimmu-nitybecauseitwasacreationofacounty,whichwasalocalsubdivisionofthestate,ratherthanamunicipality.TheSCOVdisagreedandheldthatmunicipalcorporationscreatedbycoun-tiesareentitledtonormoreimmunitythanmunicipalcorpora-tionscreatedbyamunicipality.

Key Holding(s):

• Forthe60-daylimitationsperiodunderCode§2.2-4363tobeginrunning,itisnotnecessarythatthepub-licbodynotifiytherecipientthatthepaymentisfinal.

• Amunicipalcorporationcreatedbyacountyisentitledtothesameimmunityasamunicipalcorporationcre-atedbyamunicipality.

• Sovereignimmunityappliestoquantummeruitclaimsarisingoutofamunicipalcorporation’sgovernmentalactions.

F F F

EnvironmentalCase: Campbell County v. Royal, Record No. 101168

(1/13/2012)Author: KinserLower Ct.: CampbellCounty(Gamble,J.Michael)disposition: Reversed

Facts: Residentsofa manufactured-homeparkbroughtsuitafterlearningthattheirwellshadbeencontaminatedbysub-stancesleachingfromanearbylandfill.Theyclaimedthatthecontaminationwasa“dischargeofoil,”inviolationofVirginia’sOilDischargeLawandalsowasatakingoftheirpropertywithoutjustcompensation.Theallegedcontaminantswerebenzeneandchlorinatedhydrocarbons.Thetrialcourtheldthattheseconstituted“oil”undertheOilDischargeLaw’sdefinitionoftheterm,andsothecountywasliableforanydamagescausedthereby.Ajuryreturnedaverdictagainstthecountyfor$9million.

Ruling:Onappeal,theSCOVreversed.Itheldthattheexten-siveanddetailedprovisionsoftheVirginiaWasteManagementActandSolidWasteManufacturingRegulationsevincedtheGeneralAssembly’sintentthattheselawsexclusivelygoverntheleachingofwastefromalandfill.Moreover,thestructureoftheOilDischargeLawreflectedtheGeneralAssembly’sintentthatitapplytosuddenreleasesofoil--notthegradualseepageofleachateandlandfillgas.

Ontheinverse-condemnationclaim,theSCOVheldthattheplaintiffhadnotofferedanyinstructionskeyedtothisclaim,andsoanydamagesthatthejuryawardednecessarilyrelatedtotheOilDischargeLawclaim.

JusticePowelldissented,joinedbyJusticeLemons.

Key Holding(s):

• Virginia’sWasteManagementActandSolidWasteManufacturingRegulationsaretheonlystatelawsthatgoverntheleachingofwastefromalandfill.TheOilDischargeLawdeesnotapplytosuchleaching.

F F F

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