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PRACTICE AND PROCEDURE

Part One

Professor Kent Sinclair

© 2010 T A B L E OF C H A P T E R S

VOLUME 1

Chapter 1 – The Virginia System Chapter 2 – Alternatives to Litigation Chapter 3 – Applicable & Equitable Principles Chapter 4 – Parties and Claims Chapter 5 – and Chapter 6 – and Personal Chapter 7 – Default Chapter 8 – and Motions Chapter 9 – Joint Tortfeasors – Release & Contribution Chapter 10 – Medical Malpractice Basics

VOLUME 2

Chapter 11 – Responsive Pleadings, , Cross-claims and Third Party Practice Chapter 12 – Immunity Doctrines in Virginia Chapter 13 – Summary Chapter 14 – Sanctions in Virginia Law Chapter 15 – Finality and Relitigation Chapter 16 – Limitation of Actions Chapter 17 – Chapter 18 – Pretrial Conferences, Management of Case Preparations, and Dormancy Chapter 19 – Nonsuits and the 21-Day Rule Chapter 20 – Rights and Procedures

- 1 - VOLUME 1

Chapter 1 -- The Virginia System A. Codes and Rules...... 28 Code §8.01-3...... 30 Rule 3:1……...... 30 Rules Titles or "Parts"...... 31 B. Admission to Practice Law...... 33 C. Structure in Virginia ...... 33 Trial "of Record": Circuit Courts ...... 33 Courts Not "of Record": General ...... 34 Venue and Jurisdiction ...... 34 Subject Matter Jurisdiction...... 35 Proceedings in General District Court...... 36 Simplified forms of pleadings ...... 36 Venue Notice...... 37 Pleadings...... 37 “Appearance” ...... 37 Discovery...... 37 "Return Day" ...... 38 Removal to ...... 38 from General District Court...... 39 Rehearing Applications in the General District Court...... 40 Conduct of the Appeal in the Circuit Court...... 41 Finality of General District Court Judgments...... 41 NOTES on Remedies and De Novo Appeal...... 41 Court System Diagrams...... 42 Juvenile and Domestic Relations District Court...... 43 Rochelle v. Rochelle ...... 45 NOTES on the 10 Days to Appeal ...... 47 Family Courts Created -- Then Not Funded ...... 48 Virginia’s Appellate Court System...... 50 The Court of of Virginia...... 50 Appeal of Right ...... 50 Appeal by Petition ...... 50 of Virginia ...... 50 NOTES on Appeal ...... 51 Diagram of Appeal Routes – Civil...... 52 Diagram of Appeal Routes – Administrative ...... 53 Thoughts on Appealability in Virginia...... 54

- 2 - Chapter 2 --Alternatives to Litigation A. Introduction ...... 57 B. Arbitration Basics ...... 59 McMullin v. Union Land & Mgt...... 59 C. Scope of the Agreement to Arbitrate ...... 63 Trustees of Asbury United Methodist Church v. Taylor & Parrish ...... 63 NOTES on Forming the Agreement to Arbitrate...... 68 D. Interpretation and Enforcement of the Arbitration Award; Preclusion and Relitigation ...... 69 Waterfront Marine Constr. v. North End 49ers Sandbridge ...... 69 NOTES on Arbitration Awards...... 77 E. Challenges to Arbitration Awards or Arbitrability...... 78 Signal Corp. v. Kean Federal Systems ...... 78 Lackman v. Long & Foster Real ...... 81 Discussion Problem...... 85 FURTHER NOTES on Arbitration Hearings...... 86 Is There an Arbitrable Dispute? ...... 86 Amchem Prods . v. Newport News Asbestos Plaintiffs...... 88 Appeal of Arbitration –Related Orders...... 93 F. Mediation Under the Virginia "Early Neutral Evaluation" System...... 94 Hypotheticals…… ...... 98

Chapter 3 – Applicable Law & Equitable Principles A. What Law Applies? ...... 100 Buchanan v. Doe...... 100 B. Claims in a "Newly Mixed" System ...... 105 The Single Form of Action – Effect of the Reform ...... 106 Table of Rules...... 107 Claims at Law or in ...... 111 Peculiarly Equitable Claims ...... 112 Claims (almost always) At Law ...... 113 C. Equitable Relief...... 114 ...... 114

- 3 - Specific performance...... 115 Reformation...... 115 Rescission…...... 115 Receivership ...... 115 Other Equitable Relief ...... 116 D. Equitable Defenses and Other Limits on Relief...... 116 E. on The Applicable Law...... 117 Code §1-10 The ...... 117 Code §1-11 Acts of Parliament...... 117 F. on Law & Equity Problems in Virginia...... 117 Wright v. Castles...... 117 NOTE: Preview ...... 122 Shevel's, Inc. v. Southeastern Associates, Inc...... 123 NOTES on "Transfer" and Trial...... 125 Stanardsville Volunteer Fire Co. v. Berry...... 126 NOTES: Procedural Life after Stanardsville: Problems Solved? ...... 133 G. Pleas and Advisory ...... 136 Nelms v. Nelms ...... 136 NOTES on Juries and Pleas ...... 141 Review of Jury on Equitable Issues...... 142 Angstadt v. Atlantic Mutual Ins. Co...... 142 H. The Nature of Equity ...... 144 Tiller v. Owen ...... 144 NOTES on Equitable Matters...... 146 I. Recommendations of a Commissioner ...... 148 Orgain v. Butler...... 149 NOTES on Commissioners in Chancery...... 151 Study and Amendment on Use of Commissioners ...... 151 Rule 3:23 Commisioners in Chancery ...... 155 J. Summary: 17 Propositions About Law & Equity in Virginia ...... 157 K. The Power of a Court Ruling on an Equitable Claim to Order All Necessary Relief ...... 160 Advanced Marine Enterprises v. PRC Inc...... 160 Hypotheticals…… ...... 162

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Chapter 4 – Parties and Claims A. Aggrieved Persons...... 165 Keepe v. Shell Oil Co...... 165 B. Representational Standing ...... 167 W.S. Carnes, Inc. v. Chesterfield ...... 167 NOTES on Standing and Representational Standing...... 168 C. of Claims and Parties Generally...... 171 D. Common Joinder Situations ...... 172 E. Nonjoinder, Misjoinder, in Simple and Complex Cases...... 173 How Many Must One Name? ...... 173 Hogan v. Miller...... 173 Joinder of Parties In Unified from 2006 Onward ...... 174 F. Necessary Parties ...... 176 Shultz v. Schultz ...... 176 Jett v. DeGaetani ...... 177 NOTES on Necessary Parties...... 179 End of Doctrinal Distinctions Concerning Parties to Equity Suits ...... 181 NOTES on Mechanics' ...... 182 G. Bringing All Claims Against All Parties in One Action ...... 183 General Liberality Established...... 183 Fox v. Deese...... 183 Multiple Claims Problems ...... 190 Powers v. Cherin...... 190 H. Misnomer……...... 194 Rockwell v. Allman...... 194 I. John Doe Plaintiffs and Defendants ...... 196 NOTES re Insurance and Insurers ...... 197 J. Wrongful Death ...... 198 Damage Categories ...... 198 Beneficiaries...... 198 Cassady v. Martin ...... 199 NOTE: Standing in Wrongful Death ...... 201 Approval of Settlements...... 202 Perreault v. Free Lance-Star...... 202 NOTES on Wrongful Death...... 208

- 5 - K. Suing Estates of Deceased Persons ...... 209 Swann v. Marks...... 209 L. Minors, Persons Under a Disability, and Convicts ...... 212 Important Code Sections...... 212 Code §8.01-2 General Definitions...... 212 Code §8.01-8 How Minors May Sue...... 212 Code §8.01-9 Guardians ad litem for persons under disability...... 212 Powers and Responsibilities of Guardians...... 214 Cook v. Radford Community Hospital...... 214 Stanley v. Fairfax Dept. of Social Services...... 216 NOTE re Indigency...... 218 Prisoners...... 219 Code §53.1-221 Appointment of Committee; Bond ...... 219 Code §53.1-222 Powers and Liabilities of Committee ...... 219 Code §53.1-223 Restriction on suits against prisoners ...... 219 Cross v. Sundin...... 220 Hypotheticals...... 221 M. "Next Friends"...... 221 Moses v. Akers ...... 221 "Next Friend" Pleading Format – Beware the Trap...... 222 N. Joinder – Adding, Dropping & Substituting Parties...... 223 Overview…...... 223 Rule 3:16 New Parties...... 223 Effect of Death of a Party ...... 224 Code §8.01-19 Effect of Marriage or Change of Name of Party ...... 224 Code §8.01-21 When Death or Disability Occurs After ...... 224 Code §8.01-22 Death or Disability of Plaintiffs or Defendants ...... 224 Code §8.01-25 Survival of causes of action...... 225 Death and the of Limitations...... 225 Substitution Procedure...... 226 Rule 3:17 Substitution of Parties...... 226 Void Suits and Nullities ...... 228 Chesapeake House on the Bay v. Virginia National Bank...... 228 NOTES on Assignment and Death...... 229 O. Seeking Declaratory Relief ...... 230 USAA Casualty Insurance Co. v. Randolph...... 230 Important Aspects of Procedure ...... 234 Hypotheticals……...... 237

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Chapter 5 – Venue and Forum Non Conveniens A. The Nature of Venue...... 240 Code §8.01-257 Venue Generally...... 241 Code §8.01-258 Venue Not Jurisdictional...... 241 B. Permissible and Preferred Venue ...... 241 Distinguishing the Two Categories...... 241 Code §8.01-260 Preferred Forum in Certain Actions ...... 243 Code §8.01-261 Category A or Preferred Venue...... 244 Code §8.01-262 Category B or Permissible Venue ...... 246 C. Where Claims Arise...... 248 Big Seam Coal Corp. v. Atlantic Coast Line Railroad...... 248 D. Where Conducts "Substantial Business Activities" ...... 250 Meyer v. Brown ...... 250 NOTES on Where Defendant Conducts Business ...... 253 E. Venue in Cases with Multiple Defendants ...... 254 Venue Good as to One is Good as to All ...... 254 Code §8.01-263 Multiple parties...... 254 F. Objection, Transfer, and Costs ...... 255 Prompt, Timely Objection Requirement...... 255 Code § 8.01-264 Venue Improperly Laid...... 255 Code § 8.01-265 by Court ...... 257 Code § 8.01-266 Costs ...... 258 Code § 8.01-267 Discretion of ...... 258 Booth v. Broudy ...... 259 Faison v. Hudson...... 261 G. Forum Non Conveniens...... 264 Norfolk & Western Railway Co. v. Williams...... 264 NOTE on "Nexus" and the Transfer Doctrine...... 268 H. Forum Selection Agreements...... 269 Paul Business Systems v. Canon U.S.A., Inc...... 269 NOTES on Specific Venue Issues ...... 275 Hypotheticals……… ...... 277

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Chapter 6 – Service of Process & A. Commencing the Action -- Generally ...... 281 Overview………...... 281 Washburn v. Angle Hardware ...... 282 What is Process in Virginia?...... 285 NOTES on People and Service ...... 287 Key Service of Process Code Sections ...... 288 Code § 8.01-275.1 When service of process is timely ...... 288 Code § 8.01-290 Plaintiffs Required to Furnish Full Name & Address ....288 Code § 8.01-293 Who May Serve Process...... 288 Code § 8.01-295 Territorial Limits Within Which Sheriff may Serve...... 289 Code § 8.01-296. Manner of Serving Process upon Natural Persons ...... 289 Some Key Rules Governing Commencement of the Action...... 290 Rule 3:2 Commencement of Civil Actions ...... 290 Rule 3:4 Copies of ...... 290 Rule 3:5 The Summons ...... 291 B. Abode Service – "Nail and Mail" and Full Faith & Credit ...... 292 v. Anderson...... 292 NOTE on the "Mailing Requirement" ...... 295 C. Serving Domestic Corporations, Partnerships, and Associations ...... 295 Summary ...... 295 Katchi v. Landmark Restaurant Associates ...... 296 D. Serving Foreign Corporations ...... 298 Code § 8.01-301...... 298 E. "Statutory Agents" of Non-Resident Motorists ...... 298 F. Service by Mail – Not !...... 299 G. Service by Publication...... 300 Overview of the Procedure...... 300 Code §8.01-316...... 301 Code §8.01-317...... 302 H. Who is a "Nonresident" for Use of Publication Service ...... 303 Dennis v. Jones...... 303 Relief from Judgments Obtained After Publication and Default...... 307 Code §8.01-322...... 307 NOTE: Constitutional Gloss on Going Beyond Mere Publication...... 308

- 8 - I. Service in Person Outside the Commonwealth ...... 309 Sketch of the Issue ...... 309 Code § 8.01-320...... 310 J. "Presence" and "General Jurisdiction"...... 311 Introduction to General Jurisdiction...... 311 Witt v. Reynolds Metals Company ...... 311 NOTE on Applying General Jurisdiction Concepts ...... 314 K. "Waiver" of Service of Process ...... 315 Code § 8.01-286.1...... 315 L. Long-Arm Statute ...... 317 Summary……...... 317 Code §8.01-328.1 Long Arm Categories ...... 318 Code §8.01-329 Service of process via Secretary of Commonwealth...... 319 M. Personal Jurisdiction Standards Applied in Virginia...... 321 The Component and Minimum Contacts ...... 321 Orchard Management Co. v. Soto...... 321 Applying Contacts and The Virginia Long Arm Statute ...... 323 John G. Kolbe, Inc. v. Chromodern Chair Co...... 323 Minimum Contacts Over the Internet ...... 326 Krantz v. Air Line Pilots Association...... 326 Claims Arising from In-State Contacts and the Long Arm Statute ...... 329 Gallop Leasing Corp. v. Nationwide Mutual Ins...... 329 NOTES On Payment Due in the Forum...... 331 Errors in the Long-Arm Mailing Process...... 332 N. Completion of Service, Return and Non-Standard Service ...... 333 General Principles ...... 333 The "One-Year Rule" for Completing Service of Process...... 334 Gilbreath v. Brewster...... 334 Computing One-Year & Application of the "Savings" Statute...... 337 Frey v. Jefferson Homebuilders, Inc...... 337 Code §1-210...... 338 Code §8.01-288...... 339 O. Contesting Service: The General Appearance Doctrine...... 340 Nature of this Trap ...... 340 Code §8.01-277...... 340

- 9 - P. Commencing Claims Against the Commonwealth and Localities...... 342 Code § 8.01-195.3 Waiver of Sovereign Immunity...... 342 Code § 8.01-195.6 Notice of Claim [Former Version]...... 343 Halberstam v. Commonwealth of Virginia ...... 344 NOTES on Giving Notice ...... 346 Recent Statutory Changes – Mechanics and Strict Construction...... 349 Code § 8.01-195.6 Notice of claim ...... 349 Notice of Claims Against Cities and Towns – And Now Counties Too...... 350 Code § 15.2-209. Notice to be given to counties, cities, and towns...... 350 Presentment" Requirement for Claims Against Counties, and Another Deadline...... 351 Code § 15.2-1246 Appeal from disallowance of claim...... 351 Code § 15.2-1248 Presentment required ...... 351 NOTE: What IS a claim? ...... 352 Q. Immunity From Service ...... 353 Code §8.01-327.2 Who are Privileged from Arrest under Civil Process...... 353 Lester v. Bennett...... 354 NOTE on Persons Exempt from Service ...... 356 R. Service of Papers after Appearance ...... 357 Code §8.01-314 Service on attorney after entry of general appearance ...... 357 Rule 1:7 Computation of Time ...... 357 Rule 1:12 Service of Papers after the Initial Process ...... 357 Rule 1:13 Endorsements ...... 358 Service by Fax, E-Mail and Commercial Delivery Service...... 358 Service by E-mail on Consent...... 359 S. Service Subpoenas to Non-Parties ...... 360 Bellis v. Commonwealth of Virginia ...... 360 T. Service of Certain ...... 363 Further Notes on Service Related Points...... 364 Hypotheticals………… ...... 365

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Chapter 7 – Default A. Introduction ...... 367 Rule 3:19 Default ...... 368 B. Background on Default in Virginia ...... 369 Problems with Defaults in Virginia Prior to 2006 ...... 369 C. and Default Mechanisms in the New Rules ...... 370 D. Timetables for Responses...... 371 General Timetable...... 371 Failure to Plead ...... 373 E. How to Avoid A Getting Into Default Under Current Practice...... 375 Filing of a "Responsive Pleading" ...... 375 Rule 1:9 Discretion of Court...... 377 F. Consequences of Default: Common Law and Today...... 378 Chappell v. Smith ...... 378 Consequences of Failure Timely to Respond – Today ...... 380 G. Efforts to Have the Default Set Aside ...... 384 Relief From the of Being in Default...... 384 Relief From Default Judgments – Within the First 21 Days...... 385 Relief From Default Judgments More than 21 Days After Entry ...... 391 Code § 8.01-428 Setting aside default judgments...... 392 Landcraft v. Kincaid...... 394 The "Independent Action'' for Relief from Judgment...... 398 Charles v. Precision Tune, Inc...... 399 NOTES on Charles and Beyond ...... 402 Powell v. Beneficial Finance Company...... 404 H. Remedies for Undisclosed Judgments (Default or Otherwise)...... 407 Statutory Changes in General ...... 407 Soldiers' & Sailors' Relief Act...... 408

- 11 - Chapter 8 – Pleadings and Motions A. General Rules of Pleading...... 411 Flexibility and Variance...... 412 …...... 412 General Pleading Standards ...... 413 Key Code Sections on Pleading...... 414 Code § 8.01-272 Pleading Several Matters; Joining Claims...... 414 Code § 8.01-281 Pleading in Alternative; Separate Trial...... 414 Rules of Court with Importance on Pleading...... 416 Rule 1:4 General Provisions as to Pleadings...... 416 Rule 1:5 ...... 417 Rule 1:9 Discretion of Court...... 417 Rule 1:10 Verification...... 417 Rule 3:18 General Provisions as to Pleadings...... 418 Rule 7B:3 General Provisions as to Pleadings ...... 418 Case law Standards on Pleading ...... 419 Moore v. Jefferson Hospital...... 419 Felvey v. Shaffer...... 421 Allegata, Probata, and the Rule Against Recovery on Claims Not Pled...... 423 Hensley v. Dreyer...... 423 Prayers for "General Relief" -- Benefits and Limits ...... 427 Jenkins v. Bay House Associates ...... 427 Practical Pleading Notes ...... 429 B. CHECKLIST: Form and Content of the Pleading ...... 431 C. Damages and the Ad Damnum Clause ...... 434 Powell v. Sears, Roebuck & Company ...... 434 Damages Notes ...... 436 Punitive Damages -- Nature of Conduct ...... 438 D. Commencement of the Action...... 440 Rule 3:2 Commencement of Civil Actions...... 440 Rule 3:4 Copies of Complaint...... 440 Notice of Lis Pendens or Attachment...... 442 Code § 8.01-268 When and how docketed and indexed ...... 442 Code § 8.01-269 Dismissal or Satisfaction of Same ...... 442 E. The Basic Response Requirement ...... 444 Rule 3:8 Answers, Pleas, and Motions...... 444 Operation of the Answer Rule in Part Three of the Rules Today ...... 445

- 12 - F. Significant Motions and ...... 447 Motions Challenging Subject Matter Jurisdiction ...... 447 Code § 8.01-276 Demurrer to / Plea in Abatement Abolished....447 Motions Challenging Personal Jurisdiction ...... 448 Code § 8.01-277 Defective Process; to Quash; Amendment ...... 448 Motions Challenging Venue...... 448 Demurrer – The Standard and its Applications...... 449 Code §8.01-273(A) Demurrer ...... 450 Code §8.01-274 Motion to Strike Defensive Pleading...... 451 Perk v. Vector Resources Group ...... 452 Craving Oyer...... 455 Ward's Equipment v. New Holland North America...... 455 NOTES on Demurrer Practice ...... 458 G. When a Complaint Has been Amended – What is Reviewed on Appeal?...... 459 Breeding v. Hensley...... 459 Bell Atlantic-Virginia, Inc. v. Arlington County ...... 460 Code § 8.01-384 Formal exceptions to rulings or orders of court unnecessary; motion for new trial unnecessary in certain cases...... 460 Code § 8.01-273(B) Demurrer and amendment and appeal ...... 461 H. Motion for a ...... 462 Overview…...... 462 Bill of Particulars Mechanics...... 462 Rule 3:7 Bills of Particulars ...... 463 Responding to an Amplified Pleading ...... 466 I. Pleas in or Special Pleas ...... 467 Key Uses…...... 467 Pleas in Bar – Taking Evidence? ...... 468 Pleas of the Statute of Limitations ...... 468 Code §8.01-235 Raising Statute of Limitations Defenses...... 468 NOTE on the Old Plea in Suspension...... 469 J. Use of Affidavits and Unsworn Declarations ...... 469 K. Pleading to the Merits ...... 470 L. Verification of Pleadings ...... 470 Code § 8.01-279 When Proof is Unnecessary unless Affidavit Filed; Handwriting; Ownership; Partnership or Incorporation...... 470 Code § 8.3-307 Burden re signatures, defenses, and due course ...... 471 Code § 8.01-28 Action upon or note...... 471 Code § 16.1-88 Procedure when sues on sworn claim...... 471

- 13 - Sheets v. Ragsdale ...... 473 NOTE on Extensions of Time to Plead and "Conditions" on Extensions ...... 475 M. Amendment of Pleadings...... 476 Core Principles and Important Situations ...... 476 Failure to Obtain Leave to Amend...... 482 Mechtensimer v. Wilson ...... 482 Rule 1:8 Amendments...... 482 Failure to Grant Leave to Amend...... 483 Mortarino v. Consultant Engineering Services...... 483 NOTE: Changing the Named Defendant...... 484 Code § 8.01-6 Amending Pleading to Correct Misnomer; Relation Back to Original Pleading...... 484 Code § 8.01-6.1 Amendment of pleading changing or adding a claim or ; relation back...... 484 NOTES – "Relation Back" ...... 485 Hypothetical ...... 489 N. Notice of Submission of Draft Orders...... 490 Rule 1:12 Copies of Pleadings and Requests for Subpoenas ...... 490 Rule 1:13 Endorsements ...... 490 Basic Operation of the Requirement...... 491 Rosillo v. Winters...... 491 Cofer v. Cofer...... 493 Void or Voidable Orders Without Submission of Drafts...... 494 Napert v. Napert...... 494 Singh v. Mooney ...... 496 Entry of Judgment By the Court Without Notice ...... 497 Smith v. Stanaway...... 497 NOTE: a Remedy for"Undisclosed" Judgments? ...... 499 Hypotheticals…… ...... 500

- 14 - Chapter 9 – Joint Tortfeasors – Release & Contribution A. Introduction ...... 503 Key Statutes...... 505 Code § 8.01-34 When Contribution Among Wrongdoers Enforced...... 505 Code § 8.01-35.1 Effect of Release or covenant not to sue ...... 505 Code § 8.01-442 In Joint Actions on Contract Plaintiff, though Barred as to Some, may have Judgment Against Others ...... 506 Code § 8.01-443 Joint Wrongdoers; Effect of Judgment Against One...... 506 General Operation of the Doctrines ...... 508 Hayman v. Patio Products...... 508 Nationwide Mutual Insurance v. Jewel Tea Company...... 511 Requirement of Plaintiff Having a Viable Claim Against the Contribution Defendant ...... 514 Pierce v. Martin ...... 514 Gemco-Ware, Inc. v. Rongene Mold and Plastics...... 517 B. Joint Tortfeasors and Contribution: SELF TEST...... 520 C. Synthesis on Contribution Law and Procedure...... 521 Tazewell Oil Co. v. United Virginia Bank...... 521 D. The Problem of Verdicts and Code §8.01-35.1...... 529 NOTES on Suing and Settling...... 530

Chapter 10 – Medical Malpractice Basics A. Introduction ...... 531 Bulala v. Boyd ...... 531 B. Medical Malpractice Review Panels...... 542 C. of Medical Malpractice Claims: Themes and Variations ...... 543 Fairfax Hospital System v. McCarty ...... 543 Fairfax Hospital System v. Nevitt...... 547 NOTES on Medical Malpractice ...... 555

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Chapter 11 – Responsive Pleadings, Counterclaims, Cross-claims and Third Party Practice

A. Basic Response Requirements ...... 562 Rule 3:8 Answers, Pleas, Demurrers and Motions ...... 562 Defendant's Response...... 564 Verification of Pleadings...... 564 Equitable Defenses in Actions at Law ...... 565 Code § 8.01-422 Pleading equitable defenses...... 565 Affirmative Defenses...... 566 Pleading Contributory ...... 568 Further Pleading Notes...... 569 B. Defendant v. Plaintiff -- Counterclaims ...... 570 General Principles ...... 570 Rule 1:4 General Rules of Pleading ...... 571 Rule 3:9 Counterclaims...... 571 NOTE on Counterclaims and Removability to Federal Court...... 573 Code Sections Relevant to Scope of Counterclaims...... 573 Code § 8.01-272 Pleading Several Matters; Joining Claims...... 573 Code § 8.01-281 Pleading in Alternative ...... 573 Piland Corp. v. League Construction...... 574 NOTE on Federal Practice & "Full Faith and Credit" ...... 575 C. Cross-claims Between Co-Parties...... 576 Rule 3:10 Cross-Claims...... 576 D. Third Party Practice...... 577 Overview……...... 577 Rule 3:13 Third-Party Practice...... 578 Valley Landscape Company v. Rolland...... 579 E. ...... 582 Rule 3:14. Intervention...... 582 NOTE on Adding or Dropping Parties Relying on the Statutes...... 583 F. ...... 584 Code § 8.01-364 Interpleader...... 584

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Chapter 12 – Immunity Doctrines in Virginia A. Sovereign Immunity is "Alive and Well" in Virginia ...... 587 Basic Principles for Governments and Workers ...... 587 Messina v. Burden ...... 587 The "Driving" Cases ...... 598 Stanfield v. Peregoy ...... 598 Driving Rescue Vehicles ...... 602 The "Doctoring" Cases...... 603 Lee v. Bourgeois ...... 603 Schools and Such ...... 605 Linhart v. Lawson...... 605 "Independent Contractors" and Immunity ...... 608 Other Sovereign Immunity Issues "As it is Applied" ...... 609 B. Recreational Facilities Statute ...... 612 Lostrangio v. Laingford ...... 612 Code § 15.2-1809...... 612 NOTES on Recreational Facilities Immunity Doctrines...... 615 C. Intentional of Governmental Employees...... 616 Niese v. City of Alexandria ...... 616 D. Other Immunity Doctrines ...... 619 Charitable Immunity ...... 619 Bhatia v. Mehak...... 619 Applying Charitable Immunity...... 621 Intra-familial Immunity...... 625 Pavlick v. Pavlick...... 625 NOTE on Abolition of Inter-Spousal Immunity ...... 629 Additional Immunity Issues ...... 630 Hypothetical ...... 631

- 17 - Chapter 13 – A. Summary on Judgment Summary ...... 633 Key Statute and Rule...... 634 Code § 8.01-420 Use of Depositions as basis for motion...... 634 Rule 3:20 Summary Judgment...... 634 B. General Operation of the Doctrine Exemplified/Vilified ...... 635 Unattainable Goal?...... 635 Slone v. General Motors Corporation...... 635 Ban on the Use of Depositions to "Support" the Motion...... 642 Gay v. Norfolk and Western Railway Co...... 642 "Admissions" May be Used to Support Summary Judgment ...... 643 Vicars v. First Virginia Bank-Mountain Empire ...... 643 C. Cross-Motions for Summary Judgment ...... 645 Town of Ashland v. Ashland Development Co...... 645 NOTES on Summary Judgment ...... 649

Chapter 14 – Sanctions in Virginia Law A. Basic Statutory Text ...... 651 Code § 8.01-271.1 Sanctions ...... 651 B. Standards Set in Case Law...... 654 Tullidge v. Board of Supervisors of Augusta County ...... 664 County of Prince William v. Rau...... 656 Oxenham v. Johnson ...... 657 NOTE: Sanctioning Attorneys and their Firms or Employers...... 668 Nedrich v. Jones ...... 669 C. Good Faith Arguments to Change Existing Law...... 672 Jordan v. Clay's Rest Home...... 672 D. Nonsuits, the "21-Day Rule" and Sanctions...... 673 Williamsburg Peking Corp. v. Xianchin Kong ...... 673 E. Narrow Tailoring Requirement for Sanctions ...... 675 Switzer v. Switzer ...... 675 F. Pushing, Shoving, Contempt of Court and the "Inherent Power'' of a Trial Judge to Control the Courtroom ...... 676 Nusbaum v. Berlin...... 676

- 18 - G. Motions for Recusal and Accusations Against a Judge...... 678 Williams and Connolly, LLP v. People for Ethical Treatment of Animals ...... 678 H. "Derision" of the Courts as an Emerging Theme ...... 681 Taboada v. Daly Seven, Inc...... 681 I. Revocation of Pro Hac Vice Admission...... 683 Petrosinelli v. People for the Ethical Treatment of Animals ...... 683

Chapter 15 – Finality and Relitigation A. Introduction to the Finality Considerations: Claims and Issues...... 685 B. Splitting the – Generally...... 688 Carter v. Hinkle...... 688 NOTE on Lessors’ Options ...... 689 C. Res Judicata ...... 690 Basic Operation of the Doctrine...... 660 Rule 1:6 to the Rescue...... 693 Rule 1:6 Res Judicata Claim Preclusion...... 693 Doumar v. Doumar...... 695 How Does One Prove Prior of a Claim? ...... 699 Bernau v. Nealon...... 699 Reed v. Liverman ...... 702 D. Collateral Estoppel ...... 705 Fundamentals ...... 705 Snead v. Bendigo ...... 705 Glasco v. Ballard...... 707 The "Mutuality Requirement"...... 710 Norfolk & Western Railway v. Bailey Lumber Co...... 710 Selected Risks Insurance Co. v. Dean ...... 713 Privity ……...... 718 Nero v. Ferris...... 718 Proving Actual Decision of an issue for Collateral Estoppel Purposes ...... 721 Reid v. Ayscue...... 721 NOTES on Finality Issues...... 724 E. “Judicial Estoppel” ...... 726 F. Correction and Finality of Judgments ...... 728 Netzer v. Reynolds ...... 728 G. Bill of Review ...... 732 Code § 8.01-623...... 732 Blunt v. Lentz ...... 732 NOTES on Judgments and Dispositions, Adult and Minor...... 736

- 19 - Chapter 16 – Limitation of Actions A. Overview and Introduction...... 742 B. Commencing Suit on "The Claim" to Stop the Clock...... 746 Brunswick Land Corporation v. Perkinson ...... 746 C. Causes of Action and Accrual Generally...... 748 Code § 8.01-230 Accrual of Cause of Action...... 748 D. The Common Subject Matters...... 749 Personal Injuries...... 749 Code § 8.01-243 Injury to person or property generally ...... 749 Other Torts ...... 753 Jordan v. Shands ...... 753 Contracts ...... 754 Code § 8.01-246 Personal actions based on contracts...... 754 Code § 8.01-247 Contracts governed by the law of another state...... 755 Code § 8.2-725 Statute of limitations in contracts for sale [of goods]...... 755 E. Professional Malpractice ...... 757 MacLellan v. Throckmorton...... 757 NOTES on the Accrual of Claims...... 759 F. "Injury to Property"...... 761 Pigott v Moran...... 761 NOTES on Fraud and "Injury to Property"...... 762 G. Construction Services – The ""...... 765 Code §8.01-250 Repose: Improvements to Real Property...... 765 Luebbers v. Fort Wayne Plastics ...... 765 H. Commercial Transactions...... 769 W. J. Rapp Co. v. Whitlock Equipment...... 769 I. Suits on Loans and Notes – Some Real Surprises ...... 771 Guth v. Hamlet Associates ...... 771 J. Discovery Rule Not Recognized (Generally) ...... 780 The General Rule ...... 780 Nunnally v. Artis...... 780 Statutory Enclaves for the Discovery Rule ...... 784 Code § 8.01-249 Accrual of claims in certain personal actions ...... 784 Code § 8.01-243 Extension in certain malpractice contexts ...... 785 K. Accrual of Claims Inside the Human Body...... 787 Focus on the Specific Injury Alleged in This Case...... 787 Renner v. Stafford...... 787 on Limitations Issues ...... 790 L. Fraud and Concealment; Estoppel...... 791 M. Continuous Treatment or Services...... 792 v. Natvig ...... 792 NOTES on Continuation and Termination of Services...... 794

- 20 - Divisible Contracts?...... 795 Nelson v. Commonwealth of Virginia ...... 795 NOTES on Contracts Subject to the Continuous Undertaking Doctrine ...... 799 N. Wrongful Death Cases...... 801 Code § 8.01-50 Action for death by wrongful act ...... 801 Code § 8.01-244 Actions for wrongful death; limitation...... 801 Unrelated death of the victim – and tolling...... 801 O. Tolling………...... 803 Code § 8.01-229 Suspension or Tolling of Statute of Limitations ...... 803 Code § 8.01-243 Extension in some actions for medical malpractice ...... 807 Code § 8.01-243.1 Actions for medical malpractice; minors ...... 808 Multistate Filings and the Tolling Principle ...... 810 Fraudulent Concealment of Claims for Tolling Purposes...... 810 Newman v. Walker...... 810 NOTE: Tolling and the Commonwealth...... 815 P. Equitable Claims and Aspects...... 816 The Doctrine of Laches...... 816 Rowe v. Big Sandy Coal Corporation ...... 816 Murphy v. Holland ...... 817 Claims with Legal Analogues ...... 820 Belcher v. Kirkwood ...... 820 NOTES: Equity and Estoppel ...... 823 Q. on Limitations...... 824 Code §8.01-247 Contract Actions ...... 824 Jones v. R.S. Jones & Assocs...... 825 NOTE on Choice of Law on Accrual of Claims...... 828 R. Limitations -- A Waivable ...... 829 Code § 8.01-235 Limitation Period as Affirmative Defense...... 829 Jones v. Jones ...... 829 S. Vested Rights in Expiration of the Period...... 830 T. "Derivative" Claims ...... 831 Mahony v. Becker...... 831 U. Application of Limitations Periods to the Sovereign...... 834 Code § 8.01-231 Commonwealth not within statute of limitations ...... 834 Commonwealth v. Board of Supervisors ...... 834 NOTES on Important Statute of Limitations Issues ...... 836 Hypotheticals…… ...... 838

- 21 - Chapter 17 – Discovery A. Introduction to the Workings of Discovery in Virginia ...... 842 B. "Scope" of Discoverable Information in Virginia ...... 843 The Basics…...... 843 Provisions of Two Key Rules ...... 848 Rule 4:0 Application of Part Four ...... 848 Rule 4:1 General Provisions Governing Discovery ...... 848 Notes on Discovery Limits and the "FOIA Alternative" ...... 855 Confidentiality of Records and Public Access Issues...... 857 Shenandoah Publishing House v. Fanning ...... 857 Privileged Communications . . . and the Nightmare of Waiver ...... 860 Walton v. MidAtlantic Spine Specialists, P.C...... 860 C. Depositions…...... 867 Overview of Practice ...... 867 Audio-Visual Depositions...... 869 Depositions Before an Action is Pending ...... 871 Deposition Mechanics...... 871 Rule 4:3 Persons Before Whom Depositions May Be Taken...... 871 Rule 4:5 Depositions Upon Oral Examination...... 872 Rule 4:6 Depositions Upon Written Questions...... 876 Rule 4:7 Use of Depositions in Court Proceedings...... 876 Use of Deposition Transcripts as Admissions and In Lieu of Testimony...... 880 Horne v. Milgrim ...... 880 King v. International Harvester Company ...... 882 Location Options for the Deposition...... 884 Code § 8.01-420.4 Location for Taking of depositions...... 884 NOTES……...... 885 D. ...... 886 Brief Overview...... 886 Text of the Rule...... 886 Rule 4:8 Interrogatories to Parties...... 887 E. Production and Inspection and "E-Discovery" Developments...... 889 Summary of the Process...... 892 Rule 4:9 Production of Documents and Things ...... 892 Production from Nonparties Under Rule 4:9A ...... 894 Rule 4:9A...... 894 F. Physical and Mental Examinations ...... 898 Introduction to the Examination and Report Process...... 898 Text of the Physical Exam and Mental Exam Rule ...... 898

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Rule 4:10 Physical and Mental Examination of Persons...... 898 NOTE……………...... 899 Application of Code § 8.01-399...... 901 Code § 8.01-399 Communications between physicians and patients...... 901 G. Requests for Admissions ...... 903 The Procedure...... 903 Governing Rule – Similar to Federal Rule 36...... 903 Rule 4:11 Requests for Admission...... 903 Basic Duties and Their Enforcement ...... 905 Erie Insurance Exchange v. Jones ...... 905 Withdrawal or Amendment of Admissions – Who's Pulling the Rug Out?...... 908 Shaheen v. County of Mathews...... 908 NOTE on Amendment of Admissions...... 911 Use of "Amended" Responses for Impeachment at Trial: Moral of the Story...... 912 Food Lion, Inc. v. Melton...... 912 H. Use of Discovered Matter at Trial...... 914 What's Conclusive (or not) and What Must Be Offered in Court – Waiver Problems Too ...... 914 TransiLift Equipment, Ltd. v. Cunningham...... 914 NOTE: TransiLift and the Adverse ...... 921 Whose Admissions Are they in Multi-Party Cases? Their Effect?...... 922 State Farm Mutual Auto Ins. v. Haines ...... 922 I. Discovery Sanctions ...... 926 Layout of The Rule and Procedures...... 926 Rule 4:12 Failure to Make Discovery; Sanctions...... 926 Survey of Key Discovery Sanction Rulings ...... 929 Discretion on Compliance, Remedies and Sanctions...... 929 First Land v. Middle Atlantic Dredging...... 929 Failure to Provide Timely Disclosure ...... 930 Woodbury v. Courtney ...... 930 Deposition Scheduling and Experts...... 930 Walsh v. Bennett ...... 930 Non-Production of Documents Involving Expert Opinion ...... 931 Flora v. Shulmister ...... 931 Motions to Quash Subpoenas to Non-Parties – Who Moves and Why...... 932 Tonti v. Akbari...... 932 The Dismissal Sanction for Failure to Give Disclosure as Required (by Rule or After an Order) ...... 933 Brown v. Black ...... 933

- 23 - Spoliation of Evidence – Test and Consequences...... 934 Gentry v. Toyota Motor Corporation ...... 934 NOTE on "Corporate Designees" and Sanctions...... 937 J. Interstate Discovery...... 938 Uniform Interstate Depositions and Discovery Act...... 938 Code § 8.01-412.9 et seq...... 939 Outgoing Discovery: Commissions and Letters Rogatory ...... 942 NOTES on Discovery Filing and Customized Procedures ...... 944 Hypotheticals…… ...... 945

Chapter 18 – Pretrial Conferences, Management of Case Preparations, and Dormancy A. Introduction ...... 947 Rule 4:13 Pretrial Procedure; Formulating Issues ...... 948 B. Local Rules ...... 949 Code § 8.01-4...... 949 Rule 1:18……...... 950 C. Motions Practice Rule ...... 953 Rule 4:15……...... 953 D. Electronic Filing...... 954 Rule 1:17…...... 954 E. Dormancy, "Striking" Cases from the Docket, & Reinstatement...... 956 § 8.01-335 Certain cases struck from dockets ...... 956 F. Mass Claim Litigations ...... 962 Code §8.01-267.1 et seq...... 962

- 24 - Chapter 19 – Nonsuits and the 21-Day Rule A. Outline of the Rule...... 968 Code § 8.01-380 Dismissal of action by nonsuit ...... 969 B. Nature of the Nonsuit Right ...... 970 Albright v. Burke & Herbert Bank & Trust Co...... 970 NOTE on Imposition of Costs ...... 972 Conner v. Rose ...... 973 NOTES: The "Same Case" and More Nonsuits...... 974 C. Counterclaims and Third Party Claims ...... 975 D. Submission of the Case...... 976 Khanna v. Dominion Bank of Northern Virginia...... 976 NOTE on Submission and Decision of Dispositive Motions ...... 978 Nonsuits "In the Nick of Time" ...... 980 Newton v. Veney and Raines...... 980 NOTE ...... 981 Homeowners Warehouse, Inc. v. Rawlins...... 982 Summary of When Nonsuit is Barred Because Too Late ...... 984 Bio-Medical Applications of Virginia v. Coston...... 984 NOTE: Motions to Dismiss for Defective Service of Process ...... 986 Atkins v. Rice ...... 986 E. Additional Nonsuits...... 987 Kelly v. Carrico...... 987 NOTE on for Notice re Second Nonsuit Applications...... 990 F. Nonsuits and Other Procedural Rules...... 991 21 Days, Again...... 991 The Berean Law Group, P.C. v. Cox ...... 991 NOTES on Discovery, Nonsuit and the 21 Day Rule...... 994 Nonsuits, Notice and the One Year Rule ...... 995 McManama v. Plunk ...... 995 Scope of Issues Nonsuited – And, What is Appealable...... 999 Wilby v. Gostel ...... 999 Meaning of the Statute of Limitations and the Tolling Rules...... 1002 Simon v. Forer ...... 1002 NOTES on Nonsuits ...... 1004 G. 21-Day Rule – Supreme Court’s Synthesis...... 1007 Super-Fresh Food Markets of Virginia v. Ruffin...... 1008 Note: Applying SuperFresh to Real World Orders & Circumstances ...... 1013 City of Suffolk v. Lummis Gin Co...... 1013 Concerned Taxpayers v. County of Brunswick...... 1013 Hutchins v. Talbert...... 1014

- 25 - Chapter 20 – Rights and Procedures

A. Introduction ...... 1017 Rule 3:21 Jury Trial of Right ...... 1021 Rule 3:22 Jury Demand Procedure ...... 1022 B. Constitutional and Statutory Rights to a Jury in Virginia...... 1023 Actions at Law ...... 1024 Illustrative Equitable Actions...... 1026 Additional Statutes Providing for a Jury...... 1027 Absence of Jury Trial Right ...... 1028 Virginia's Liberal Joinder Doctrine for Claims on Related Facts ...... 1028 C. Method of "Demanding a Jury" & Procedural Issues Under Rule 3:21(b).....1030 Avoiding Basic Problems in the Demand Process...... 1030 Multiple Party Situations: an Introduction...... 1032 Timing of the Demand, in General ...... 1032 D. Form and Sufficiency of the Jury Demand ...... 1034 Specification of Issues for Jury Trial in the Demand...... 1034 Ten-Day Limit on Subsequent Demand by Other Parties...... 1035 Failure to Specify is a Demand as to All Issues Triable by Jury ...... 1035 Amended Pleadings Raising New Issues ...... 1037 New Issues Raised in Counterclaims ...... 1038 E. Trial by Jury Pursuant to Demand ...... 1040 Jury Trial Right Attached to Specific Issues – Not to Case as a Whole ...... 1040 F. Motions to Strike a Jury Demand...... 1041 G. Trial of "Non-Jury" Issues by a Jury – On Consent ...... 1043 H. Waiver of Jury Trial Results in a Nonjury Trial...... 1044 I. Statutory Jury Rights in Certain Equitable Claims ...... 1046 Code § 8.01-336...... 1046 Issues for an Advisory Jury...... 1047 "Pleas to Equitable Claims" ...... 1047 NOTE: Designation of Case on Docket as Jury Action ...... 1049

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Chapter 1 The Virginia System

A. Codes and Rules ...... 28 Code §8.01-3 ...... 30 Rule 3:1……...... 30 Rules Titles or "Parts" ...... 31 B. Admission to Practice Law ...... 33 C. Court Structure in Virginia...... 33 Trial Courts "of Record": Circuit Courts ...... 33 Courts Not "of Record": General District Court...... 34 Venue and Jurisdiction...... 34 Subject Matter Jurisdiction...... 35 Proceedings in General District Court...... 36 Simplified forms of pleadings...... 36 Venue Notice...... 37 Pleadings ...... 37 “Appearance” ...... 37 Discovery ...... 37 "Return Day"...... 38 Removal to Circuit Court...... 38 Appeal from General District Court ...... 39 Rehearing Applications in the General District Court ...... 40 Conduct of the Appeal in the Circuit Court ...... 41 Finality of General District Court Judgments ...... 41 NOTES on Remedies and De Novo Appeal ...... 41 Court System Diagrams ...... 42 Juvenile and Domestic Relations District Court ...... 43 Rochelle v. Rochelle ...... 45 NOTES on the 10 Days to Appeal...... 47 Family Courts Created -- Then Not Funded...... 48 Virginia’s Appellate Court System ...... 50 The Court of Appeals of Virginia...... 50 Appeal of Right ...... 50 Appeal by Petition...... 50 Supreme Court of Virginia ...... 50 NOTES on Appeal ...... 51 Diagram of Appeal Routes – Civil ...... 52 Diagram of Appeal Routes – Administrative ...... 53 Thoughts on Appealability in Virginia ...... 54

- 27 -

Civil Procedure in Virginia is a blend of centuries-old traditions and new developments, ranging from statutes invoking acts of Parliament in the reign of James the First of , to Code sections and important case developments in the last few months. Every session of the General Assembly for the past decade has passed numerous new civil procedure provisions, and the caselaw on procedure is as prolific as any topic area in Virginia law. As in federal practice, for most Virginia procedural issues "there's probably a rule on it" -- in the statute books, the Rules of Court, or caselaw. As of January 1, 2006 a new “single form of pleading” regime became effective in Virginia – about 65 years after the federal courts made this change and fully 50 years after most other states followed suit. In the current system any claim may be brought, and multiple claims may be asserted in the same case, such that causes of action and forms of relief traditionally viewed as “legal” as well as those traditionally held “equitable” may be sought in the same case. It is expected that a decade or more may be required to work out aspects of this landmark revision in the civil litigation landscape in Virginia. That topic is introduced in Chapters 1 and 3 of these Readings. This introductory chapter will briefly sketch the organization of the codified principles and provide an overview of the structure of Virginia's court system. Chapter 3 will then introduce and explore the structural problems which inhere in a system which must deal with a broad range of common law and equitable issues in a newly “mixed” environment where there is a “single form of action.”

A. Codes and Rules.

The procedural volume of the Code of Virginia is Title 8.01, and it encompasses most of the statutes pertinent to civil procedure. Other important statutory segments of the Code are located in Title 16.1, which deals extensively with the lower trial courts in Virginia, interestingly labeled "courts not of record" (an apt title which, nonetheless, mistakenly implies a lesser importance than they have).

- 28 - The chapter divisions of Title 8.01 provide a roadmap to the allocation of topics, some of which are highlighted here because the prevalent issues in Virginia practice and procedure focus upon them more than some other topics: 1. General Provisions as to Civil Cases, §§ 8.01-1 through 8.01-4.2 2. Parties, §§ 8.01-5 through 8.01-24 3. Actions, §§ 8.01-25 through 8.01-227 4. Limitation of Actions, §§ 8.01-228 through 8.01-256 5. Venue, §§ 8.01-257 through 8.01-267 6. Lis Pendens and Attachment, §§ 8.01-268 and 8.01-269 7. Commencing Civil Actions; Pleading; Motions, §§ 8.01-270 through 8.01-284 8. Process, §§ 8.01-285 through 8.01-327.2 9. Personal Jurisdiction, §§ 8,01-328 through 8.01-330 10. Dockets, §§ 8.01-331 through 8.01-335 11. Juries, §§ 8.01-336 through 8.01-363 12. Interpleader, Certain Third Party Claims, §§ 8.01-364 through 8.01-373 13. Trial, §§ 8.01-374 through 8.01-384.1 14. Evidence, §§ 8.01-385 through 8.01-420.4 15. Payment and Set-off, §§ 8.01-421 through 8.01-423 16. Compromises, §§ 8.01-424 and 8.01-425 17. Judgments and , §§ 8.01-426 through 8.01-465 17.1. Uniform Enforcement of Foreign Judgments Act, §§ 8.01-465.1 to 8.01-465.5 17.2. Uniform Foreign Country Money-Judgments Recognition Act, §§ 8.01-465.6 18. Executions and other Means of Recovery, §§ 8.01-466 through 8.01-525 19. Forthcoming Bonds, §§ 8.01-526 through 8.01-532 20. Attachment and Bail in Civil cases, §§ 8.01-533 through 576 21. Arbitration, §§ 8.01-577 through 8.01-581 21.1. Medical Malpractice, §§ 8.01-577 through 8.01-581 21.2. Mediation, §§ 8.01-581.21 through 8.01-581.23 22. Receivers, §§ 8.01-582 through 8.01-606 23. Commissioners in Chancery, §§ 8.01-607 through 619 24. Injunctions, §§ 8.01-620 through 8.01-634 25. Extraordinary Writs, §§ 8.01-635 through 8.01-668 26. Appeals to the Supreme Court, §§ 8.01-669 through 8.01-675.2 26.1. Appeals to the Court of Appeals, §§ 8.01-675.3 and 8.01-675.4 26.2. Appeals Generally, §§ 8.01-676 through 8.01-688

- 29 - The Supreme Court of Virginia is authorized under Code § 8.01-3 to promulgate rules for procedures in Virginia Courts: A Supreme Court to prescribe rules. The Supreme Court, subject to §§ 17-116.4 and 16.1-69.32, may, from time to time, prescribe the forms of writs and make general for the practice in all courts of the Commonwealth; and may prepare a system of rules of practice and a system of pleading and the forms of process and may prepare rules of evidence to be used in all such courts. This section shall be liberally construed so as to eliminate unnecessary delays and expenses. B. Effective date; availability. --New rules and amendments to rules shall not become effective until 60 days from adoption by the Supreme Court, and shall be made available to all courts, members of the bar, and the public. C. Rules to be published. --The Virginia Code Commission shall publish and cause to be properly indexed and annotated the rules adopted by the Supreme Court, and all amendments thereof by the Court, and all changes made therein pursuant to subsection D hereof. D. Effect of subsequent enactments of the General Assembly on rules of court. The General Assembly may, from time to time, by the enactment of a general law, modify, or annul any rules adopted or amended pursuant to this section. In the case of any variance between a rule and an enactment of the General Assembly such variance shall be construed so as to give effect to such enactment. . . . The Supreme Court has exercised this authority and has regularly updated the Rules of Procedure. The present rules were adopted in a series of promulgations beginning in 1971. Portions of the rules, which are divided into groups applicable to different courts, called "Parts," are amended from time to time by order of the Court. There were formerly two separate "Parts" of the Rules for civil cases, one for litigating equitable claims and a separate ones for claims that historically were "at law." Effective January 1, 2006 the Supreme Court of Virginia replaced both of these sets of rules with a single "Part Three" of the Rules of Court. The cornerstone concept of the new civil procedure system is expressed in new Rule 3:1. Rule 3:1. Scope. There shall be one form of civil case, known as a civil action. These Rules apply to all civil actions, in the circuit courts, whether the claims involved arise under legal or equitable causes of action, unless otherwise provided by law. These rules apply in cases appealed or removed to such courts from inferior courts whenever applicable to such cases. These Rules shall not apply in petitions for a of habeas corpus. In matters not covered by these Rules, the established practices and procedures are continued. Whenever in this Part Three the words "action" or "suit" appear they shall refer to a civil action, which may include legal and equitable claims.

- 30 - Rules Titles or "Parts." In the modern Virginia litigation system the general title divisions of the Rules, highlighting the procedural aspects, are: Part One: General provisions Part One A: Foreign attorney admissions [omitted from this volume] Part Two: Reserved. [Formerly Equity Practice and Procedure] Part Two A: Appeals pursuant to the Administrative Process Act Part Three: Practice and Procedure at Law Part Three A: [omitted from this volume] Part Three B: Traffic [also omitted] Part Three C: Offenses and fines [omitted] Part Four: Pretrial Procedures, Including Discovery Part Five: Supreme Court practice Part Five A: The Court of Appeals' procedures Part Six: Virginia State Bar [omitted here] Part Seven: General District Court Rules Part Eight: Juvenile and Domestic Relations Rules

B. Admission to Practice Law

Licensure of an attorney, and revocation of that license, are matters governed by statute, and it is not within the jurisdiction of a circuit court to adjudicate the revocation of a license to practice law except in compliance with the statutory authority. Thus the statewide license to practice law covers the full panoply of actions an attorney can undertake from writing a will to representing a person in a controversy before a court. And while the issuance of a license to practice law carries with it certain rights for the holder of that license, the ability to practice before a particular court is a distinct and separate consideration. The Supreme Court has held that—independently of any statutory restriction—the courts of record of this Commonwealth may, in a proper case, suspend or annul the license of an attorney, so far as it authorizes him to practice in the particular court, but no farther. For a general discussion of these issues, see In re Jonathan A. Moseley, 273 Va. 688, 643 S.E.2d 190 (2007). Although the local circuit courts had jurisdiction in the 19th century both to issue a license to practice law and control the actual practice before that court, the intervening statutory regimen ceding licensure to the Virginia State Bar (as opposed to the various circuit courts) has no effect on the continuing authority of a court to regulate the privilege of practicing before that court. However, the Supreme Court is quite clear in declaring that all courts of record in Virginia have inherent power in a proper case to suspend or annul the license of an attorney practicing in the particular court which pronounces the sentence of disbarment. This independent and inherent power to regulate the practicing before it is vested in courts as part of the authority necessary to the existence and function of a court. In Code § 54.1-3935 the General Assembly has set forth the procedure by which the appropriate court is empowered to revoke or suspend a license to practice law that

- 31 - affects the right to practice law throughout the Commonwealth. However, the Supreme Court has concluded that this statutory authority does not curtail a local trial court’s pre- existing and independent authority to control those who practice before it, including the authority to suspend or revoke an attorney’s privilege to practice before that court. Such power does not depend for its existence upon either constitutional or statutory provisions, but is possessed by all courts of record, unless taken away by express constitutional (or possibly legislative) inhibition. The inherent power to discipline and regulate attorneys practicing before it, since the is an independent branch of government, is not controlled by statute. Thus, the court’s authority to discipline attorneys and regulate their conduct in proceedings before that court is also a constitutional power derived from the separation of powers between the judiciary, as an independent branch of government, and the other branches. Accordingly, under long- standing , a circuit court had jurisdiction to revoke the attorney's privilege to practice before it. In one recent case, the imposition of this bar as a sanction was upheld, limited to the geographical jurisdictional boundaries of that court and not extending to other courts beyond that boundary.

- 32 - C. Court Structure in Virginia

The court structure of Virginia is multi-leveled in Virginia. At the trial level there are two broad categories: the full jurisdiction trial court is known as the Circuit Court. There is, however, also a level known as the "courts not of record", comprised of the General District Court and a specialized version of that same court level, known as the Juvenile and Domestic Relations District Court. Some actions must be brought in a particular court under the Code. See, e.g., Code § 16.1-241 below. In general, the Circuit Court may hear appeals "de novo" from district court proceedings, and it has jurisdiction to hear matters itself originally.

Trial Courts "of Record" 1. Circuit Courts. General Features of the System Plenary jurisdiction. The trial courts of the Commonwealth with the most broad jurisdictional powers are the circuit courts, presently divided into 31 circuits. See Code § 17.1-506 and Rule 1:15. The only limits upon the subject matter jurisdiction of the Circuit Courts result from the carving out of jurisdictional niches for other . Thus civil actions to recover personal property or money of a value of $4,500 or less cannot be brought in the Circuit Court but should, instead, be lodged with the general district court. See § 16.1-77; cf. § 17.1-513. Some categories of cases are assigned to other tribunals on substantive bases. These include specific jurisdictional grants to the General District Court and the Juvenile and Domestic Relations Court, the power of the Industrial Commission to hear workers' compensation matters, preemption by federal law in limited spheres (e.g., certain labor and antitrust topics, federal maritime proceedings) and certain rate matters committed to the jurisdiction of state agencies. Extraordinary Writs. Under § 17.1-513 the Circuit Court has the power to issue a variety of writs, including the writs of quo warranto (see § 8.01-635 et seq.), , prohibition and to lower tribunals and mandamus to government bodies in the territorial jurisdiction of the court, and to other persons where necessary to prevent a failure of justice. Mandamus is sought to order a or governmental body to take specified action. The writ of prohibition may be sought from a higher court, to direct a lower court to cease proceedings where there is no subject matter jurisdiction. It does not lie, however, to correct errors being made by a lower court which has statutory power to hear the type of case involved. (An example of this principle is found in Elliot v. Great Atlantic Management, 236 Va. 334 (1988)). Appellate Jurisdiction. The Circuit Courts have the power to review judgments entered by the General District Court and the Juvenile and Domestic Relations District Court. As there is no record created in those courts, the before the Circuit Court is a trial "de novo." The Circuit Courts also may exercise review of the decisions of certain administrative agencies. See Code Section 9-6.14:16 and part 2A of the Rules of Court.

- 33 -

Powers of the Clerk of Court. The clerk of the Circuit Court is invested with several quasi-judicial functions under Code §§ 31-4 and 64.1-75 through -77. These functions include of wills (but not construction thereof or determination of the validity of provisions in the instruments). See Smith v. Mustian, 217 Va. 980, 234 S.E.2d 292 (1977). In other circumstances the clerk on occasion appoints guardians for individuals, such as minors or those with a disability, who may require it, and appoints executors, administrators and curators of decedents, appraisers for the estates of decedents, and certain committees. Where there is a challenge to the clerk's performance of these generally ministerial duties, it will be heard by the Circuit Court whose clerk made the order, under Code § 64.1-78.

Courts Not of Record

Pursuant to Code §§ 16.1-69.6 and -69.6:1 the Commonwealth is divided into 32 districts. These districts are the same as the 31 circuits except that one area has been divided into two districts, such that Virginia Beach is District 2 and the counties of Accomack and Northhampton are District 2A.

General District Court. Procedure in the General District Court is governed by a number of statutes, most of them in Title 16.1 of the Code of Virginia. There are also statewide Rules for civil and criminal proceedings in the General District Court, found in Parts 7A, 7B and 7C of the Supreme Court's Rules. The concept of the General District Court is to provide a fast, simple and inexpensive means of hearing disputes. Code § 16.1-93 recites that in this simplified system the parties' legal and equitable interests are to be are preserved. However, there is no jury, and no record is taken by the Court (a party may at private expense bring a court reporter to preserve testimony, which is taken under oath, but may not be used later as testimony in future proceedings). Venue and Jurisdiction. The general venue principles discussed in Chapter 5 of these readings apply in the General District Court. See § 16.1-76, § 8.01-257 et seq. Personal jurisdiction is, of course, required for the court to exercise power over defendants brought before it, and the due process clause applies. Service of process is somewhat simplified under §§ 16.1¬79 and -80 and Rule 7B:4. Process, under these provisions, is directed to the sheriff or another person authorized to serve process. The defendant is commanded by the summons to appear in court no sooner than 5 days after service and no more than 60 days after service.

- 34 -

Subject Matter Jurisdiction. The General District Court is a court of limited jurisdiction, and is confined to the authority expressly conferred upon it. The statutes contain both monetary and subject matter provisions governing the jurisdiction of the General District Court. See §§ 16.1-77 through -77.2. The maximum amount in controversy which may be litigated in this court is $15,000 for private damage claims. There are two general exceptions to this jurisdictional ceiling: (1) the court has power to award recovery in leases for business, commercial or agricultural purposes in excess of the normal ceiling, and (2) the has drafted the statute to allow the court to hear "distress warrants" in landlord/tenant disputes even if the dollar amount in controversy in a rare case exceeds the normal jurisdictional amount. Claims of $4,500 or Less. Under § 16.1-77, the General District Court has exclusive jurisdiction over these low-dollar claims. The $4,500 ceiling is computed exclusive of interest and any attorney's fees contracted for in the instrument at suit. Claims between $4,501 and $15,000. Claims in this range are subject to concurrent jurisdiction with the circuit courts. A plaintiff may elect whether to bring such a claim in the General District Court or the Circuit Court. Small Claims. Code §§ 16.1-122.1 through -122.7 also provide for small claims divisions in each General District Court. Under this procedure, claims in civil actions for damages of $5,000 or less may be commenced as small claims proceedings in the General District Court (at the option of the plaintiff obtaining the original "warrant") pursuant to a greatly simplified procedure in which no party may be represented by counsel (a corporation or entity may appear by an officer, and a lay person who needs help understanding the proceedings may appear with a friend, but not an attorney). Other Concurrent Matters. Attachment cases where the plaintiff's claims does not exceed $15,000 may also be brought in either the General District Court or the Circuit Court. Finally, unlawful detainer or entry actions in which only rights of possession are at stake are also subject to concurrent jurisdiction. Subject Matter Summary. The following is a complete list of the grounds for subject matter jurisdiction in the General District Court. Since the Court only has jurisdiction where it is expressly authorized, and will not obtain jurisdiction by implication, the following list is an exhaustive catalogue of the causes of action which may be brought in General District Court. The at least 17 categories recognized in the statutes of Virginia (most subject to the $15,000 amount in controversy limit) are as follows: 1. Detinue actions, to recover specific personal property. 2. Actions to collect on any debt, fine or other monetary obligation, such as a proceeding to collect on a judgment. 3. Suits for damages for breach of contract. 4. Claims for damages arising out of injury to property (real or personal). 5. Suits for damages arising out of injury to the "person", such as defamation suits and actions relating to violations of free speech.

- 35 - 6. Claims for judgment on a forthcoming bond (upon 10 days notice) taken by the sheriff under a writ of fieri facias issued by the Court. As noted below as to other claims, the defendant may remove such an application to the Circuit Court if the amount exceeds $4,500 and the defendant files an affidavit asserting a substantial defense. See § 16.1-77.1. 7. Actions for partition of personal property valued from $20 to $15,000 (see §16.1-77.2. This remedy may be useful in some acrimonious divorce proceedings). 8. Attachments (as noted above, concurrent jurisdiction with the Circuit Court; indeed, if the attachment is levied upon real estate, the case must be removed to the appropriate court of record. See §§ 16.1-105, 16.1-77 (2) and § 8.01-533 ff.). 9. Actions for unlawful entry upon real estate (concurrent jurisdiction with the Circuit Courts, up to the $15,000 damage ceiling for General District Court actions). 10. Unlawful detainer actions (where the tenant holds over after expiration of a lease) (concurrent jurisdiction applies here also). 11. Proceedings to adjudicate and commit legally incompetent, drug addicted, or inebriated persons. See § 16.1-69.28. 12. Interpleader proceedings involving personal property within the dollar limits of General District Court jurisdiction. Section 16.1-77 (6). 13. Suits by resident tenants complaining of breach of a lease by the landlord. See Code § 55-248.27. 14. Claims for damages up to $200 for unsolicited transmission of junk fax advertising, under Code § 8.01-40.2. 15. Actions for or mandamus under the Virginia Freedom of Information Act. See Code § 16.1-106. 16. Inspection warrants under Code § 63.1-198.04 (1993). 17. Habitual offender (motor vehicle) proceedings (concurrent with Circuit Court). Note: General District Court has no jurisdiction over cases involving title to real property. See Addison v. Salyer, 185 Va. 644, 40 S.E.2d 260 (1946).

Proceedings in General District Court. Simplified forms of pleadings. An action may be commenced in the General District Court by the filing of a warrant (§ 16.1-79) and paying the required process fee. This procedure is considerably simpler than creating a civil complaint, and the action is deemed brought when an accompanying memorandum is filed, so long as the warrant is thereafter served and a return filed. See § 16.1-86. The party may choose to commence the proceeding by a complaint (formerly called a "motion for judgment" and still referred to in some General District Court statutes in that way). See § 16.1-81. When commenced by a complaint, the action is pending from the time the motion is filed. Section 16.1-86. Under present practice, filing of civil warrants and motions for judgment takes place prior to transmittal of the papers to the sheriff for service, and thus the running of the statute of limitations is tolled before service is actually effected upon the defendant.

- 36 - Venue Notice. The pleading commencing an action in General District Court is required by statute to advise the defendant of his right to object to improper venue, that is, if the action is not brought in a forum authorized under Code §§ 8.01-261, -262 or - 263. See § 8.01-264(C) and Rule 7B:3. Selective Incorporation of Other Procedures. Further procedure in such an action may be pursuant to the rules of Court for Courts of Record, as nearly as such procedures may practically be adapted for use in General District Court. See § 16.1-82. Pleadings. Since the commencement of the action may be by a very simple instrument, it is the fact that the listed categories of proceedings are fairly discrete that allows these proceedings to be heard expeditiously. It is not the case that, as a regular matter at any rate, the averments are elucidated in further pleadings. Indeed, bills of particulars and grounds of defense are only utilized if ordered by the court. See Rule 7B:2 and § 16.1-25:1. “Appearance.” Thus, normally, after service or process the next event is commonly the physical appearance of the parties in the General District Court on the "return date." Appearance by the plaintiff is mandatory for judgment to be granted (Rule 7B:7), but that appearance may be made by the party plaintiff, plaintiff's attorney, or an employee. If the defendant does not appear the court may grant judgment for the plaintiff. See Rule 7B:9. (This is limited by the requirement of 10 days' notice by mail prior to the entry of judgment if service was achieved by "posting" under § 8.01- 296(2)(b)). If plaintiff does not appear the court is authorized to dismiss the case with where the defendant is present and denies under oath any obligation to plaintiff, or the court may dismiss the case without prejudice if the defendant cannot make those averments. See Rule 7B:8. Finally, if neither the plaintiff nor the defendant appears, the court is required to dismiss the case without prejudice. Rule 7B:8.

"Lay" Pleadings in General District Court. Since 1990 the Code has contained versions of the provisions of §16.1-88.03 allowing appearance for several purposes by officers and certain agents, as described above. In 2009 the General Assembly added a provision that removes the limitations on what an officer of a closely held corporation can do – for cases where the amount in controversy does not exceed $2,500. Under the new provision, a corporate plaintiff or defendant with no more than five stockholders (not publicly held) may be represented by an officer of that corporation who is now given "all the rights and privileges given an individual to represent, plead, and try a case without an attorney, provided that such officer has the unanimous consent of all the shareholders to do so." The new Code section provides that upon such consent a qualifying close corporation, whether "a corporate plaintiff or defendant" may be represented by an officer of that corporation, who is invested by the Code provision with all the rights and privileges given an individual to represent, plead, and try a case without an attorney. See generally Va. Code § 16.1-81.1.

Discovery. The full range of discovery devices in Part Four of the Rules is NOT available in General District Court. A subpoena duces tecum may be issued for discovery by way of production of documents and things, and may be directed against non-parties as well as persons who are parties to the suit. Code § 16.1-89. This procedure is not available without permission and a request must be filed 15 days before

- 37 - trial. See Rule 7A:12. A summons for interrogatories is permitted under § 16.1-103 (see § 8.01-506 et seq.) after issuance of a writ of fieri facias. "Return Day." Most General District Court proceedings are uncontested, and hence are heard without the filing of a responsive pleading by the defendant, and without discovery or other formal proceedings. The "return day" is the date set for initial proceedings in the case. In actions commenced by the filing of a civil warrant, the return date must be at least five days after service of process but no more than 60 days thereafter. Similarly, if the suit is commenced by filing of a complaint in the General District Court, the return date must be at least five days but no longer than 60 days after service of process upon the defendant. See Code §§ 16.1-79 to -81. Special Proof Provisions. There are at least three special provisions simplifying the proof of common matters and proceedings before the General District Court. First, under § 16.1-88 and § 8.01-28, sworn claims may be used where the action is for payment of money on a contract. Second, under § 8.01-416 an affidavit may be admitted regarding damage to motor vehicles (which may relieve a party of the obligation to pay an expert to come to court to testify about the damage done). Third, under § 16.1-88.2, medical reports may be introduced as evidence in personal injury suits provided that the party introducing the report gives the opposition ten days' written notice and a copy of the report. Counterclaims, Cross-Claims and Third-Party Practice. A defendant may counterclaim in writing for any cause of action -- in or in contract -- at law (or in equity, if the party is asking for money damages) even if the counterclaim is in excess of the plaintiff's claim. The counterclaim, however must be within the dollar limits of the General District Court's jurisdiction, and must be raised prior to trial. § 16.1-88.01. The defendant may file a third-party warrant or complaint directed against any person who is not a party and who is or may be liable for all or part of the claim asserted, just as in Circuit Court practice. See Rule 7B:10. The third-party instrument, however, must be filed within 10 days after service or the date of trial, whichever is sooner or with leave of Court at another time. Id. Removal to Circuit Court. Pursuant to former Code § 16.1-92, if the amount in controversy exceeded $4,500 (exclusive of interest, costs and attorneys fees) the defendant could remove the action to Circuit Court, if so advised. In 2007 this option was eliminated from the Code of Virginia. Appeal of an adverse determination to the Circuit Court is still available, as a matter of right, when final judgment is entered in the General District Court. Judgment in the General District Court. An abstract of judgment is available after proceedings culminate in the General District Court as provided in Code § 16.1- 95. Counsel must ask for the preparation of the abstract, however. See also § 16.1-116. A writ of fieri facias (the basic enforcement of judgment writ empowering the sheriff to seize property) may also be sought, as provided in Code §16.1-98. Final judgments of the General District Court, if not appealed, are entitled to res judicata and collateral estoppel effects.

- 38 - Appeal from General District Court Any action where the amount in controversy exceeds $50, or which implicates the constitutionality of a statute or ordinance, may be appealed to the Circuit Court. The appeal is perfected by noting the appeal in writing, filing the required bond, and depositing costs and the writ tax with the General District Court under Code § 16.1-106. In 2009 the General Assembly added words to Virginia Code § 16.1-106, which is the basic provision addressing appeals from courts not of record in civil cases. The revision emphasizes that on appeal in a civil case the matter is to be heard de novo: The revised portion of this Code section reads: "Such appeal shall be to a court of record having jurisdiction within the territory of the court from which the appeal is taken and shall be heard de novo. " (2009 amendment highlighted). This provision is parallel to the standard provision for appeal of criminal dispositions in general district court, Code § 16.1-136, which (since 1956) has provided: "Any appeal taken under the provisions of this chapter shall be heard de novo in the appellate court and shall be tried without formal pleadings in writing; and, except in the case of an appeal from any order or judgment of a court not of record forfeiting any recognizance or revoking any suspension of sentence, the accused shall be entitled to trial by a jury in the same manner as if he had been indicted for the offense in the circuit court."

Appeal De Novo -- Details. Appeals from the J&DR courts are governed by Code § 16.1-296. In Sasson v. Shenhar, 276 Va. 611; 667 S.E.2d 555 (2008), the Supreme Court of Virginia reviewed the statutory developments in recent decades, and noted that it has held as far back as 1982 that appeals brought under Code § 16.1-296 are to be heard de novo in the circuit court. In Sasson the Supreme Court confirmed again that the traditional form of appellate review in these cases has long been a de novo circuit court review of J&DR court proceedings. Accordingly, in Sasson v. Shenhar the Supreme Court concluded in Sasson that – except as altered by the provisions of Code § 16.1-298 regarding the status of the judgment of the J&DR court upon the filing of a petition or during the pendency of an appeal -- the appeal is to be heard de novo in the circuit court. In 2009 the General Assembly expressly amended Virginia Code § 16.1-296, which governs jurisdiction over appeals, adding provisions stating that the circuit courts shall hear such appeals de novo: "From any final order or judgment of the juvenile court affecting the rights or interests of any person coming within its jurisdiction, an appeal may be taken to the circuit court within 10 days from the entry of a final judgment, order or conviction and shall be heard de novo."

Noting the Appeal and Filing Bond. These requirements (see § 16.1-107) are simple, but defects may be "jurisdictional," and hence failure to complete them in a proper and timely fashion can be "fatal." See generally Hurst v. Ballard, 230 Va. 365 (1985). All appeals may be noted in writing by the party, the party's attorney, or an employee or other person entitled to ask for judgment under any statute. Rule 7A:13. The notice of appeal and bond are required within 10 days after the judgment, though the bond may be filed up to 30 days after the judgment (10 days in unlawful detainer actions). See Godlewski v. Gray, 221 Va. 1092, 277 S.E.2d 213 (1981) (bond posted within 17 days was permissible except in unlawful entry and detainer cases where bond must be within 10 days. See also § 8.01-129). The bond is normally filed by the appellant, but may be provided by another. Combined Insurance Companies of America v. Mundy, 210 Va. 3, 168 S.E.2d 127 (1969). See also § 8.01-4.2.

- 39 - Indigent parties are required to file the bond in order to appeal in landlord-tenant cases (described in the current statutes as civil cases for trespass, ejectment or any action involving the recovering rents) but in all other subject matters no indigent person is required to post an appeal bond. The bond is not required when appeal is taken to protect an estate, minor, convict, or incompetent person, a city, county, town or the Commonwealth. Where the bond is timely filed, but in an incorrect amount, the error may be corrected in the Circuit Court. Payment of certain filing fees and a "writ tax" in the General District Court within 30 days after the judgment appealed from is a jurisdictional requirement for maintaining an appeal, matters discussed in Hurst v. Ballard, 230 Va. 365, 337 S.E.2d 284 (1985). Upon the completion of the required papers and filings, the clerk of the General District Court transmits the papers to the Circuit Court as required in Code §16.1-112. Note: where a counterclaim has been filed there must be a specific appeal of the counterclaim from the General District Court. Appeal of plaintiff's claim does not automatically bring the counterclaim before the circuit court according to a 1977 case. See K-B Corporation v. Gallagher, 218 Va. 381, 237 S.E.2d 183 (1977). Rehearing Applications in the General District Court. The Code permits a party to request a rehearing from the General District Court within 30 days after judgment, under Code § 16.1-97.1 The court must rule on this application within 45 days from the date of judgment. However, the seeking of rehearing does not extend the time for filing a notice of appeal or the bond. This illogical rule means, therefore, that one who wishes to preserve the right to appeal must do so by proper notice and complying with the bond and filing fee requirements for the appeal. Absent preservation of the normal appeal track, the only remedy available upon the denial of a motion for rehearing will be an appeal of the denial of rehearing itself, which requires a showing that the refusal to rehear was an "abuse of discretion," as explained in National Airlines v. Shea, 223 Va. 578 (1982). Conduct of the Appeal in the Circuit Court. Code §§ 16.1-112 through -114.1 speak of appeals being generally tried summarily according to law and equity (and when there is a conflict, equity prevails). In the modern Virginia system the meaning of these old phrases that remain in the Code is unclear. The statutes do specify, however, that if the amount in controversy exceeds $50 and either party demands a jury, the action on appeal may be tried to a jury in the Circuit Court on the appeal. Under Code § 16.1-112, at the outset of the appeal the clerk of the Circuit Court will notify the appellee that an appeal has been docketed. Unlike the service of a new complaint, this notice does not require the appellee to respond within 21 days. The trial court may permit the appellee to file a grounds of defense even though more than 21 days have expired. See Overnight Transportation Co. v. Barnett's Incorporated, 217 Va. 222, 227 S.E.2d 695 (1976). By recent statute, when a defendant appeals to the Circuit Court, the plaintiff is expressly permitted to amend the amount sought to exceed the amount which could have been obtained in a General District Court proceedings. After an appeal, the defendant may file a counterclaim for the first time. On the question whether the amount of the counterclaim may exceed the jurisdictional ceiling of the General District Court, see Copperthite Pie Corp. v. Whitehurst, 157 Va. 480, 162 S.E. 189 (1932) (suggesting the limit applies) and Hoffman v. Stuart, 188 Va. 785,

- 40 - 51 S.E. 2nd 739 (1949) (trial according to rules of the Circuit Court, which would be unlimited monetary jurisdiction). Finality of General District Court Judgments. A new trial may be granted in the General District Court within 30 days after judgment. Section 16.1-97.1 (a) suggests that one must wait 30 days before collecting such a judgment instead of the 10 day period allowed for appeal. Under §16.1-97.1(b), a motion for rehearing does not bar the prosecution of an appeal. After 30 days the judgment is final and subject only to extraordinary relief mechanisms. These include a bill of review in equity alleging after-discovered evidence, which may, in the discretion of the Court, be heard. As discussed in the sections of these Readings dealing with default and relief from judgment, an independent action may also be maintained for relief from fraud or where there was no valid process. Where an appeal is taken, the judgment of General District Court is in effect annulled and is no longer res judicata even if a nonsuit is taken by plaintiff in the Circuit Court. See Thomas Gemmell, Inc. v. Svea Fire & Life Insurance Co., 166 Va. 95, 184 S.E. 457 (1936). The Supreme Court has repeatedly castigated use of the judgment or of evidence taken during General District Court proceedings – once an appeal has been taken.

Notes on Remedies and De Novo Appeal

Remedies in General District Court. The General District Court is normally said to have no jurisdiction to award equitable relief, and specifically cannot enter an injunction. One exception to this rule, created in recent years, is authority to hear Freedom of Information Act cases and to entertain applications for mandamus or injunctions in connection with such claims. One other form of remedy traditionally thought to be equitable can also be obtained in this court: interpleader is available to determine ownership of property before the General District Court, subject to the $15,000 jurisdictional ceiling of the court. An action may be brought by the stakeholder of property, interpleading those who arguably may have a claim to that property and seeking a resolving the rights of those interested. De Novo Appeal, Again. Obviously, the doctrine of De Novo appeal to the Circuit Courts is fraught with procedural difficulties and raises the practical question whether the duplication of effort suggests that the system should be altered. See generally "Appeal De Novo in Virginia: An Examination of Its Present Utility," 42 WASH. & LEE L. REV. 1149 (1985). Surprisingly, only a miniscule fraction of parties losing in General District Court take an appeal, even though it is inexpensive and readily available. This suggests that most parties – even the losing litigants – are satisfied with the "day in court" afforded by the General District Court of the Commonwealth.

- 41 -

- 42 - 3. Juvenile and Domestic Relations District Court. The Code in §§ 16.1-226 through -30 provides for juvenile and domestic relations district courts, with jurisdiction over juvenile crime and issues concerning the welfare of children. Divorce proceedings must be prosecuted in circuit court, but domestic relations matters relating to spousal support, spouse abuse and intra-family offenses are also within the subject matter competence of the J&DR court. Note that as long ago as 1992 the Judicial Council proposed legislation to create a Family Court, which would substantially rearrange the jurisdiction over juvenile and domestic matters. The discussion below pertains the law prior to implementation of any such new court system. The J&DR district court has exclusive jurisdiction under § 16.1-241 over the following matters: z Control and custody of children who are abused, abandoned, under custody orders or charged with certain traffic offenses. z Commitment of mentally ill or certification of retarded child. z Judicial consent in lieu of parental consent for children separated from parents or guardians, or those in custody of court. z Matters relating to desertion or non-support of a child. z Matters relating to the custodians of children in several circumstances. See §§ 63.1-56, - 104 and 16.1-241(F). z Certain work permit applications from minors. z Prosecutions of those charged with child abuse or with contributing to the delinquency of a minor. z Preliminary hearings in significant charges against minors. z Intra-family offense proceedings. z Protective orders against spouse abuse. z Petitions for emancipation of minors. z Proceedings under RURESA (Code § 20-88.20:2).

The J&DR district court has concurrent jurisdiction with the circuit court in the following categories of proceedings under Code §§ 16.1-241 and -244:  Custody, visitation and support of a child.  Custody under habeas corpus.  Termination of residual parental rights.  Spousal support after separation.  Petitions to obtain services for a minor.

- 43 - Once a child comes under the jurisdiction of the J&DR court, its power over the minor continues until he or she reaches age 21, unless the circuit court assumes jurisdiction or the minor is placed in the custody of the department of public welfare. See § 16.1-242. The J&DR courts are said to have exclusive jurisdiction in the city or county in which they are created, and concurrent jurisdiction with the J&DR district court of adjoining city or county, stated to extend one mile into adjacent locality. See § 16.1- 241(first paragraph). The meaning of these provisions has yet to be elucidated. Transfer to and from the Circuit Court. Criminal and quasi-criminal matters involving children will be transferred to the J&DR district court if the minor was under 18 when an offense was committed and the J&DR court has jurisdiction. Conversely, minors 15 years old or older at the time of being charged with a felony may have their cases transferred from the J&DR court to the circuit court. Notice is given in such cases to the child, parent or attorney and the J&DR court will hold a probable cause hearing to determine whether the child is amenable to treatment or rehabilitation as a juvenile, considering the history (a different procedure is used for rape and murder charges, or where the minor has prior felony convictions). Other central considerations are whether the child is retarded or criminally insane, and whether the interests of the community require that the child be placed under legal restraint. See § 16.1-269(C). If, after hearing, the J&DR court elects to retain jurisdiction, the Commonwealth may appeal. No caselaw has yet arisen on the juvenile's right to appeal a transfer ruling by the J&DR court. Appeal from these J&DR proceedings is to the circuit court. See §§ 16.1-296 through -298. See also § 16.1-136.

- 44 - ROCHELLE v. ROCHELLE 225 Va. 387, 302 S.E.2d 59 (1983)

JUSTICE RUSSELL delivered the opinion of the Court. [In a child custody dispute, the father filed a custody petition in the Juvenile and Domestic Relations District Court in Arlington, where the family had lived, one day after the mother filed a petition in the Circuit Court for Franklin County seeking child and spousal support. The Franklin County court ultimately granted a “no fault” divorce to the father, denied spousal support to the mother, but gave her custody of the children. On appeal, the father challenged the power of that court to grant this relief. ] We first consider the question of jurisdiction. Code § 16.1-241(A) purports to vest in the juvenile and domestic relations district courts exclusive original jurisdiction of all cases involving child custody, visitation, and control. But Code § 16.1-241(A)(3) expressly makes this jurisdiction concurrent with that of the circuit courts "as provided in § 16.1-244 hereof." . . . . We construed the predecessors of these sections to mean that the circuit court had no original jurisdiction to entertain a petition for custody, support and visitation, unless such matters were incidental to a cause properly within the court's jurisdiction. Poole v. Poole, 210 Va. 442, 171 S.E.2d 685 (1970). Here, however, the mother filed a petition in the Circuit Court of Franklin County which prayed for an award of spousal support. This constitutes a claim for separate maintenance, which is within the inherent jurisdiction of a , even in the absence of statute. Wilson v. Wilson, 178 Va. 427, 17 S.E.2d 397 (1941). Thus the circuit court had jurisdiction to entertain the mother's petition as a suit for separate maintenance and to determine all questions of child custody, support and visitation as matters incidental thereto. The fact that the mother's claim for spousal support proved unsuccessful is immaterial. The court's jurisdiction, once properly invoked, is not because a part of the claim on which it was based is later found to lack merit. When a court acquires jurisdiction of the subject matter and the person, it retains jurisdiction until the matter before it has been fully adjudicated. Laing v. Commonwealth, 205 Va. 511, 137 S.E.2d 896, 899 (1964). Because the Franklin County Circuit Court had jurisdiction of the subject matter and the proper persons, the Arlington juvenile court was "divested of such jurisdiction" by Code § 16.1-244. . . . We turn to the court's ruling on the merits. No purpose would be served by a review of the evidence, which was lengthy, detailed, and in substantial conflict. An Arlington County juvenile probation counselor recommended that custody be awarded to the father. A Franklin County social worker recommended that custody continue in the mother. Depositions were read and evidence was taken ore tenus in three separate hearings over a period of nineteen months. During the twelve-month interval between the second and third hearing, monthly visitation and reports were ordered. Counsel filed written memoranda and made extensive oral arguments. The record shows that the chancellor gave the evidence, investigative reports, and arguments full and patient consideration. In these circumstances, we cannot substitute our conclusions for those drawn from the evidence by the . A chancellor's finding on conflicting evidence, heard ore tenus, will not be disturbed on appeal unless it is plainly wrong or without evidence to support it. White v. Perkins, 213 Va. 129, 189 S.E.2d 315 (1972). Code § 8.01-680. Affirmed.

- 45 -

- 46 - Notes on the 10 Days to Appeal

In Fairfax Dep’t of Human Development v. Donald, 251 Va. 227, 467 S.E.2d 803 (1996), the Supreme Court held: The jurisdiction, practice, and procedure of juvenile and domestic relations district courts are wholly statutory and are set forth in Title 16.1, Chapter 11 of the Code (Code § 16.1-226 et seq.). Walker v. Dept. of Public Welfare, 223 Va. 557, 562, 290 S.E.2d 887, 890 (1982). An appeal from a district court to a circuit court may be taken within ten days from the entry of a final judgment or order of the district court, Code §§ 16.1-132 and -296, and shall be heard de novo in the circuit court, Code §§ 16.1-136 and -296. The circuit court, in all such cases on appeal, shall have all the powers and authority granted by Chapter 11 to the district court. Code § 16.1-296. In 1991, the General Assembly specifically addressed district courts' authority to award attorney's fees. Acts 1991, c. 534. Code § 16.1-278.19 provides that, "in any matter properly before the [district] court, the court may award attorneys' fees and costs on behalf of any party as the court deems appropriate based on the relative financial ability of the parties." This Code section is the sole authority granted to district courts for awarding attorney's fees. Circuit courts have those powers and authority that are granted to district courts, but district courts are empowered to award attorney's fees only in matters "properly before [them]." We read the statutes to apply the same jurisdictional prerequisite to a circuit court's authority to award attorney's fees as applies to a district court's authority to award fees. A matter may not be properly before a circuit court, and thus ineligible for an award of attorney's fees, even though it originally was properly before the district court. In the present case, the appeal was not taken within ten days from the district court's final order; therefore, the circuit court was without jurisdiction, and the matter was not "properly before" the circuit court. Thus, the circuit court lacked authority to award attorney's fees.

- 47 - Family Courts Created -- Then Not Funded

The General Assembly in 1993 passed legislation creating a Family Court in Virginia, but failed to fund it. If ever made effective, the new court will replace the Juvenile and Domestic Relations General District Courts, Code § 16.1-69.35(6), and will absorb former Circuit Court jurisdiction over certain domestic relations subjects, such as divorce. Code § 16.1-241(S). Current Juvenile and Domestic Relations General District Court judges will become Family Court judges, and Circuit Court judges who desire to do so may be designated to serve the Family Courts. Code § 16.1-69.9:01. The Family Courts are to be courts of special and limited jurisdiction with exclusive trial court jurisdiction in family matters. Code § 16.1-69.5(c). For classification purposes, the Family Court is construed to be a court not of record. The Family Court does, however, possess the characteristics of both a court of record and a court not of record, reflecting its basis in former Circuit Court jurisdiction and in Juvenile and Domestic Relations General District Court jurisdiction. Code § 16.1- 69.5(c). Jurisdiction over certain family related matters, such adoption, divorce, annulment, affirmation, support, maintenance, and equitable distribution, is transferred from the Circuit Courts to the Family Court. Code § 16.1¬241(A),(S),(T),(U), and (V). over certain school board actions and certain hearing officer decisions is also transferred to the Family Courts. Code § 16.1-241(Y). The Family Court will have exclusive original jurisdiction over these matters (notably divorce, custody and visitation, support, parentage determinations, termination of parental rights, and required treatments and service matters) with an appeal of right to the Court of Appeals. Code § 16.1-296.2. In addition to taking over family matters heard presently by Circuit Courts, the new Family Courts will continue as a court not of record for criminal, delinquency, status offenses and mental commitments currently within the Juvenile and Domestic Relations General District Court's jurisdiction. Code § 16.1-296(A). Appeals from rulings on these subject matters will be de novo to the Circuit Court. Code § 16.1-296(G). Alternative is expected to play an important part in the Family Court scheme. Given the incapability of the former system to deal with the underlying emotional conflicts inherent in divorce and custody proceedings, for example, Family Court judges are directed by the legislature to give deliberate attention to referring the parties to mediation and may, sua sponte, or on motion of one of the parties refer a matter to mediation. Code § 16.1-272.1. The expected increase in the caseload faced by the Family Courts is further compounded by the abolition of the use of commissioners in chancery. See Code § 8.01-607, which states that circuit courts can appoint Commissioners in Chancery. Since the family court is a court not of record and is not a circuit court, under the statutes as presently constituted the Family Court would not have authority to appoint Commissioners in Chancery. Following a local planning process and various implementation studies, the Judicial Council has submitted in subsequent legislative sessions the proposed statutes designed to generate the money necessary to fund the Family Court system through

- 48 - increased court fees, to specify where new judges and clerks will be needed and to develop a training program for Family Court judges and clerks. For over a decade, the implementation of the Family Court remains to be undertaken, and only temporary funding was available , and that has now ended. In recent years the judicial establishment has again been making funding of this proposal a priority, thus far without appreciable success. ______

- 49 - Virginia’s Appellate Court System

The Court of Appeals of Virginia. At present the Court of Appeals consists of eleven judges who sit in panels of three judges each. See Code § 17.1-400 ff. Pursuant to Code Section 17.1-404, the Court has original jurisdiction in contempt proceedings, injunctions under § 8.01-626 in any case over which it would have appellate jurisdiction, and various writs. See, e.g., In re Johnston, 3 Va.App. 492, 350 S.E.2d 681 (1986) (writ of prohibition directed to lower court, lies only in cases of extreme necessity). Appeal of Right. Any party may appeal as a matter of right from a final decision from the Circuit Court on appeals from administrative agency proceedings, actions of the Workers' Compensation Commission and domestic relations matters. Appeal by Petition. The Court of Appeals has jurisdiction to hear appeals upon petition of a party in any criminal matter, ranging from traffic infractions to the crime of murder, except where a sentence of death was imposed. Moreover, the Commonwealth may appeal in certain revenue cases and felony prosecutions, under limited circumstances. See § 19.2-400. Other grounds for jurisdiction by petition include matters where a municipal ordinance has been declared invalid and denial of weapons permits. Further review. The parties have no right, under §§ 17.1-409 and - 410, to further appeal to the Supreme Court in civil cases or non-capital criminal matters. Nonetheless, the parties may petition the Supreme Court to grant review on constitutional or precedential grounds. See also § 8.01-670. Finally, the Supreme Court may, upon the motion of the Court of Appeals or its own initiative, take any case from the docket from the Court of Appeals, before decision, if it appears to the Supreme Court to be a matter of imperative public importance or the Supreme Court finds that the Court of Appeals' docket is unduly delayed or crowded.

Supreme Court of Virginia. Makeup and Jurisdiction of the Supreme Court. Under the of Virginia, Article VI §§ 1-9 and Code § 17.1-300, there are seven members of the Supreme Court, any four of whom constitute a quorum. While the code permits them to sit en banc or in divisions (Code § 17.1-308), in practice the Court sits as a whole for all decisions on the merits. The Supreme Court has both original and appellate jurisdiction. The Court's original jurisdiction includes petitions for habeas corpus (Code § 8.01-654 et seq.), mandamus (§ 8.01-644 at seq.), writs of prohibition and certain matters of judicial censure, retirement and removal as to which the Court has exclusive jurisdiction. The Supreme Court's appellate jurisdiction, under Constitution Article VI § 1, authorizes hearing of matters involving constitutionality of under the Virginia or United States and cases involving the life or liberty of a person. All other appellate jurisdiction of the Court is created by statute.

- 50 - In addition to these traditional grounds for proceedings before the Court, questions may also be certified to the Supreme Court of Virginia by the federal courts. See rule 5:42. Thus, where there is no controlling precedent on a point of Virginia law, such as in the construction of a state statute or state constitutional provision, another court may suspend its proceedings and certify questions to the Supreme Court of Virginia seeking an authoritative construction. See, e.g., School Board of the City of Norfolk v. U.S. Gypsum Co. 234 Va. 32, 360 S.E.2d 325 (1987). Chief Justice. The position of Chief Justice for two centuries was filled by the justice with the longest service upon the Court. However, in 2002 the General Assembly enacted a new statute which provides that after the expiration of the full term of the current Chief Justice, selection of future Chief will be by majority vote of the members of the Court, and that the Chief Justice shall serve for a term of four years in that (unless he or she resigns the Chief Justice position earlier to return to duties as a member of the Court). During the summer of 2002, the Court elected Justice LeRoy R. Hassell, Jr., to become the Court's first Black Chief Justice upon the expiration of Chief Justice Carrico's term in February, 2003.

Notes on Appeal

Judgment on appeal. Where the record and the law permit final disposition, the Court may enter final judgment on appeal in lieu of remanding a case. See § 8.01-681. Review of damage awards. Periodically parties raise on appeal the claim that damages awarded at the trial level were improper. Where the nature of the claim is in essence an assertion that the damages were excessive, the Court has only on rare occasions found relief warranted. More often than not a successful challenge to damages on appeal will focus on the absence of non-speculative proof at the trial level upon which to predicate an award. See e.g., Murray v. Hadid, 238 Va. 722, 385 S.E.2d 898 (1989). It is generally said that in a civil case the Court will not increase or decrease an award for unliquidated damages fixed by the trial court. But cf. United Construction Workers v. Laburnum Construction Corporation, 194 Va. 87, 275 S.E.2d 694 (1953), affirmed 347 U.S. 656 1954 (downward modification of trial court award of unliquidated damages without remand for new trial).

- 51 -

- 52 -

- 53 - Thoughts on Appealability in Virginia

A sketch of the appellate system in Virginia is not complete without recognizing that there are some rough edges in connection with interlocutory appeals.

"All judgments that end a case with prejudice are appealable. " A judgment or decree is final and hence generally appealable when it either refuses or grants the relief sought by the party complaining. A final order has been defined, therefore, as one that disposes of the entire action and leaves nothing to be done except the ministerial superintendence of execution of the order. If it appears upon the face of the proceedings that further action in the cause is necessary to give completely the relief contemplated by the court, then the judgment is not final (and there can be no appeal).

Specific Situations. (1) Nonsuits. The grant of a nonsuit is not an appealable event, even if all of the claims in a proceeding are nonsuited, unless the aggrieved defendant argues that the nonsuit was not properly available under the standards of Code § 8.01-380. Denials of motions for nonsuit are not appealable unless the aggrieved plaintiff argues that the trial court was required to grant the nonsuit under Code § 8.01-380. (2) Demurrer. The sustaining of a demurrer with leave to amend is not a final order until 21 days after the period allowed for amendment has passed. The sustaining of a demurrer without leave to amend is a final disposition, and is appealable.

Partial Dispositions Appealable by Statute in Virginia Judgments, orders or decrees that resolve fewer than all of the claims in a litigation, or the liability of fewer than all of the parties, are appealable in Virginia today only as follows: Equity Proceedings, As expressly provided by statute -- orders granting, dissolving or denying an injunction, requiring money to be paid or title to property to be changed, and of the principles of a cause are expressly made appealable by the Code. Cases Involving Fewer than Six Plaintiffs: By statute, an order refusing a writ of quo warranto is appealable. In addition, Virginia has an "" statute which allows appeal by permission of the courts when an issue needs early appellate guidance. Multiple Claimant Cases. In cases involving six or more plaintiffs arising out of a common occurrence, decisions that would in other cases be merely interlocutory may be appealed if the appellate court grants a petition for appeal. Partial Dispositions Appealable Under Virginia Case Law In the vast majority of cases, only one appeal is permitted -- after a final judgment disposing of all of the claims for relief in the litigation. Judgments, orders or decrees that resolve fewer than

- 54 - all of the claims in a litigation, or the liability of fewer than all of the parties, are appealable under Virginia case law if the adjudication resolves a collateral matter, separate and distinct from the general subject of the litigation and affecting only particular parties to the controversy.

Appellate Review Only For Abuse of Discretion:

- 55 - - 56 - Chapter 2 Alternatives to Litigation A. Introduction ...... 57 B. Arbitration Basics...... 59 McMullin v. Union Land & Mgt...... 59 C. Scope of the Agreement to Arbitrate...... 63 Trustees of Asbury United Methodist Church v. Taylor & Parrish...... 63 NOTES on Forming the Agreement to Arbitrate ...... 68 D. Interpretation and Enforcement of the Arbitration Award; Preclusion and Relitigation...... 69 Waterfront Marine Constr. v. North End 49ers Sandbridge ...... 69 NOTES on Arbitration Awards ...... 77 E. Challenges to Arbitration Awards or Arbitrability ...... 78 Signal Corp. v. Kean Federal Systems ...... 78 Lackman v. Long & Foster Real Estate...... 81 Discussion Problem...... 85 FURTHER NOTES on Arbitration Hearings...... 86 Is There an Arbitrable Dispute?...... 86 Amchem Prods . v. Newport News Asbestos Plaintiffs...... 88 Appeal of Arbitration –Related Orders...... 93 F. Mediation Under the Virginia "Early Neutral Evaluation" System...... 94 Hypotheticals…… ...... 98

A. Introduction

Many forms of alternative dispute resolution mechanisms are available in the Commonwealth. Some 25 local dispute resolution centers flourish in communities of varying sizes. For many years the Virginia Bar Association and the Virginia State Bar have maintained a Joint Committee on Alternative Dispute Resolution, which has fostered the development of these centers and other litigation alternatives. Professors Richard Balnave and Kent Sinclair of the University of Virginia faculty were active in these efforts. In 1991 the Supreme Court of Virginia established within its staff an Office of Dispute Resolution Services to encourage the further development and implementation of negotiation, mediation and arbitration services in Virginia. Legislative efforts to regularize the availability of mediation and arbitration particularly are continuing each year. The statutes now on the books provide an option for a "summary jury trial" to quickly provide a non-binding mini-trial that could help parties evaluate a case for settlement purposes. Code §§ 8.01-576.1 to -576.3. Private (not court-annexed) arbitration has long been a feature of the litigation landscape in Virginia, as elsewhere. In 1986 the General Assembly enacted a version of the Uniform Arbitration Act. There is a plethora of older law on arbitration in Virginia. In 1991 the Supreme Court had the first occasion to review the contractual provisions commonly used to invoke the arbitration mechanism in light of the current statutes.

- 57 - See generally §8.01-577, and §8.01-581.01 to -581.16. Important sections from the Virginia version of the Uniform Act are quoted in the cases that follow.

- 58 - B. Arbitration Basics

McMULLIN v. UNION LAND & MGT. 242 Va. 337, 410 S.E.2d 636 (1991)

JUSTICE WHITING delivered the opinion of the Court: In this case, we decide whether an arbitration provision in a partnership agreement is sufficiently broad to require arbitration of a partner's claim against the partnership for services rendered to the partnership. On January 29, 1973, James H. McMullin, Union Land & Management Company (Union), and Said Haddad, as general and limited partners, entered into a partnership agreement to acquire, own, and operate real property in an area in Arlington surrounded by North Randolph, Ninth, Tenth, and North Stafford Streets (the block). Union's and Haddad's interests in the partnership were acquired in exchange for property and cash, Union receiving a 57.6% interest and Haddad receiving a 38.4% interest. McMullin, a real estate agent and developer who had supervised the acquisition of land the partnership acquired at the time of its formation, was given a four percent interest in the partnership as compensation for his work. Paragraph 10 of the agreement provided that each general partner would devote "so much of his time as he . . . deems reasonably necessary to efficient operation," but would be paid no salary. Paragraph 11, however, authorized the general partners to contract with a partner for compensation for services rendered to the partnership. Later, the partners agreed to such a partnership contract with Real Estate Service, Inc. (RESI), a company in which McMullin had an interest, for the management of the partnership's parking lot in the block. And, the partnership paid RESI and McMullin a monthly fee for their services for the period from January 1974 through September 1988. In a letter dated January 18, 1984, to William C. Howlett, president of Union, and Haddad, McMullin billed the partnership for additional services McMullin and RESI had performed in developing the block from January 1, 1970, through December 31, 1983. The letter described the fee as: James H. McMullin to receive an additional 1% ownership in Randolph Street Limited Partnership as partial compensation. Further, since two parcels(land - Dr. Johnson and David E. Holmes) remain to be acquired, in order to complete the ownership of the entire block by the Partnership, and it is the intention of McMullin to continue efforts to secure the aforementioned two parcels, it is stipulated that upon said acquisition McMullin should be additionally compensated by the award of an additional 5% Partnership interest. Howlett and Haddad agreed to an immediate transfer of the one percent interest from their partnership shares to McMullin, which was done. Howlett, however, would not agree to a transfer of an additional five percent interest to McMullin unless the remaining two parcels were acquired.

- 59 - Later, Howlett advised McMullin that Union would not contribute its proportionate share of the cost of acquiring the remaining two parcels or some of the other costs of developing the block. A short time later, McMullin requested that Union and Haddad transfer the remaining five percent partnership interest to him in accordance with his previous billing. McMullin contended that the later transfer of the five percent interest was merely a deferral of income until the two parcels were obtained, not "a condition to the receipt of compensation which he believed had been earned already." Haddad made his proportionate contribution of two percent to McMullin's increased partnership interest, but Howlett refused to make Union's three percent contribution because the remaining two parcels had not been acquired. Although this dispute was never resolved, McMullin later negotiated a sale of the block for $ 15,400,000, and had the disbursing agent deduct the value of Union's three percent partnership interest in the net sales price ($ 462,000) as a charge against Union "for prior services rendered." Pursuant to the provisions of paragraph 19 of the partnership agreement, Union filed a demand for arbitration of this issue with the American Arbitration Association naming McMullin as the respondent. As pertinent, paragraph 19 provides: Any claim or controversy arising out of or relating to this Agreement or a breach hereof shall, upon the request of any party involved, be submitted to and settled by arbitration in accordance with the rules then obtaining in the Commonwealth of Virginia of the American Arbitration Association. . . . McMullin filed an answer and a counterclaim in the arbitration proceeding. In his counterclaim, McMullin sought to recover an additional sum of not less than $ 300,000 from Union for the "reasonable value of his services rendered since 1985 in connection with the sale or lease of the [block]." Relying upon Code § 8.01-581.02(B), Union filed an application for a permanent stay of arbitration of the counterclaim upon the ground that the arbitration agreement did not cover the issues raised in the counterclaim.1 Without hearing evidence, the trial court considered the pleadings, the statements of facts filed with the pleadings and with ' memoranda, and the argument of counsel. Later, the court granted Union's application for a stay of arbitration of the counterclaim on the ground that McMullin's claim for compensation for selling the partnership property "is outside the scope of arbitration because it does not arise out of the partnership agreement." McMullin appeals. We begin by considering the language of the agreement to arbitrate contained in paragraph 19. We observe that it not only covers disputes "arising out" of the partnership agreement, but also those disputes "relating to this agreement or a breach hereof." Except for the substitution of the word "hereof" for the word "thereof," it is the standard arbitration clause recommended by the American Arbitration Association, Commercial Arbitration Rules 5 (1991). The standard arbitration clause has been described by the Supreme Court as "a broad arbitration clause." Moses H. Cone Hospital v. Mercury Constr. Corp., 460 U.S. 1, 5 (1983).

1 On application, the court may stay an arbitration proceeding . . . on a showing that there is no agreement to arbitrate. Such an issue, when in substantial and bona fide dispute, shall be forthwith and summarily tried and the stay ordered if found for the moving party. If found for the opposing party, the court shall order the parties to proceed to arbitration.

- 60 - In a dispute between joint venturers as to the scope of the recommended standard arbitration clause, another court has said, "[t]his broad language encompasses venture- generated or venture-related disputes between the parties, however labeled. It is immaterial whether the basis for the claim is in the language of the joint-venture agreement or the relationship itself." Sindler v. Batleman, 416 A.2d 238, 243 (D.C. 1980). Such a clause "is not limited to disputes over the terms of the contract or to disputes arising during the performance of the contract." Maldonado v. PPG Industries, Inc., 514 F.2d 614, 616 n.6 (1st Cir. 1975). Rather, "[b]road language of this nature covers contract-generated or contract-related disputes between the parties however labeled." Id. at 616. Indeed, "[a]n arbitration clause covering claims 'relating to' a contract is broader than a clause covering claims 'arising out of' a contract." Int'l Talent Group, Inc. v. Copyright Management, Inc., 629 F.Supp. 587, 592 (S.D.N.Y. 1986). Union contends, however, that McMullin's counterclaim is based on "a professional fee for services performed in the sale of real estate . . . not based upon rights conferred by the Partnership Agreement or upon any agreement among all the partners pursuant to the terms of Partnership Agreement." Union characterizes McMullin's claim as one for "services just as if he were a third-party vendor to the Partnership." We do not agree. If McMullin were a third-party vendor, he would not have had to obtain all general partners' agreement for his compensation. See Code § 50-9; Holloway v. Smith, 197 Va. 334, 341, 88 S.E.2d 909, 914 (1955). One of Union's defenses to McMullin's claim is that paragraphs 10 and 11 of the partnership agreement bar a general partner's recovery for services rendered to the partnership unless all general partners contract therefor. Thus, this "controversy" "relates" to the partnership agreement. Moreover, McMullin raises the issue of whether there was such a contract by his in the counterclaim that his negotiations with the prospective purchasers of the block were undertaken "with the full knowledge and at the direction of the remaining partners." Hence, at least one "controversy" is whether McMullin's claim for compensation in negotiating the sale of the block breaches or conforms to the provision requiring that all partners contract for his compensation from the partnership. Because the litigants must refer to that provision in resolving this controversy, we are of opinion that it is one "relating to this Agreement." Therefore, the trial court erred in ordering a stay of the arbitration proceedings. Accordingly, we will reverse the judgment of the trial court, enter an order that the parties proceed to arbitration, and dismiss this proceeding.

- 61 - - 62 - C. Scope of the Agreement to Arbitrate

ASBURY UNITED METHODIST CHURCH v. TAYLOR & PARRISH, INC. 249 Va. 144, 452 S.E.2d 847 (1995)

JUSTICE KEENAN delivered the opinion of the Court: In these appeals, we consider whether the trial court erred in confirming an arbitration award that required payment to a construction contractor, under the doctrine of quantum meruit, for work performed by the contractor under an invalid change order to a construction contract. . . . The contract provided for a "guaranteed maximum cost" to the Owner of $2,370,943, subject to adjustment for changes in the work as provided by the contract. In addition, the contract contained an arbitration clause, Paragraph 7.9.1, which provided in material part: All claims, disputes and other matters in question between the Contractor and the Owner arising out of, or relating to, the Contract Documents or the breach thereof . . . shall be decided by arbitration in accordance with the Construction Industry Arbitration Rules of the American Arbitration Association then obtaining unless the parties mutually agree otherwise. On November 2, 1990, Taylor submitted a Demand for Arbitration pursuant to the arbitration clause. Taylor alleged that the Church had made numerous changes to the construction work by a change order dated June 29, 1990 (the June 1990 change order), which increased the guaranteed maximum cost of the work. Taylor alleged that it was owed $ 362,462.28 as a result of the change order "under the contract," and that the Church had "breached the contract" by failing to tender this additional amount. On December 4, 1990, the "Trustees of Asbury United Methodist Church" (the Trustees) filed a motion for declaratory judgment in the trial court. The Trustees alleged they "owned" the real estate on which the construction work was done and that, at a duly held church conference meeting, they had been authorized to encumber the property and contract with Taylor for the improvements. The Trustees further alleged, however, that Taylor was entitled only to the "guaranteed maximum cost," as adjusted, and they asked the trial court to declare that the June 1990 change order under which Taylor claimed additional charges was invalid, because it had been signed without the authority of the church congregation. Taylor replied to the declaratory judgment action by seeking an order compelling arbitration, pursuant to Code § 8.01-581.02(A). The trial court ordered the parties to arbitrate, ruling that the arbitration clause was broad enough to encompass the parties' dispute regarding the validity of the June 1990 change order. The arbitrator, Orran Lee Brown, conducted two days of hearings and issued a "Decision of Arbitrator" dated August 19, 1991. Brown found that the June 1990 change order had been signed by two of the trustees for the Church who had no actual or apparent authority to bind the Church. Citing Code § 57-15 and other authority, Brown concluded that, in order for any change order to be valid, Taylor was required to obtain the congregation's authorization and a circuit court's approval to bind the Church

- 63 - contractually for improvements to the Church's property. Thus, Brown ruled that the Church was not obligated by the terms of the June 1990 change order "as a contractual matter." However, Brown also stated that Taylor could seek recovery based on quantum meruit for the value of its services, and he granted Taylor leave to arbitrate such a claim. The Trustees asked the trial court to confirm the arbitrator's ruling that the June 1990 change order was invalid, but to vacate that portion of the arbitrator's decision holding that Taylor could assert a request for quantum meruit relief. The Trustees contended that this ruling exceeded the arbitrator's powers, because it was outside the scope of the matters submitted to him by the trial court's order compelling arbitration. By order dated January 7, 1992, the trial court granted the Trustees' request confirming in part and vacating in part the arbitrator's decision. In its order, the trial court also referred the matter back to the arbitrator for apportionment of fees and costs. Thereafter, Taylor obtained leave from the arbitrator to file an Amended Demand for Arbitration. In the Amended Demand, Taylor asserted claims based on theories of breach of contract and quantum meruit, stated in the alternative, against both the Church and several "Individual Respondents[,] in their individual rather than representative capacities," who were members of the Church's board of trustees. The arbitrator later dismissed the individual respondents as parties. The Trustees opposed the Amended Demand in the trial court by seeking to enjoin Taylor from "proceeding in any manner to raise any issue other than that provided for in the Court's Order of January 7, 1992," because, they said, Taylor's Amended Demand went beyond the scope of the hearing on apportionment of fees and costs that had been ordered by the trial court. Taylor, however, continued to seek arbitration of its Amended Demand. Pursuant to Code § 8.01-581.02(A), Taylor again applied to the trial court for an order compelling arbitration. The trial court granted Taylor's motion and ordered arbitration. In an opinion letter dated February 12, 1992, the trial court stated, Although defendant's original Demand For Arbitration did not include the issue of quantum meruit, defendant did allege a breach of contract by plaintiff. Defendant's Amended Demand again alleges breach of contract by plaintiff, among other allegations. Breach of contract has not been addressed by the arbitrator. The issues included in defendant's Amended Demand are arbitrable, therefore the Court hereby grants defendant's Application to Stay Proceeding and to Compel Arbitration. On April 10, 1992, the trial court denied the Trustees' request for an injunction and ordered the parties to arbitrate "the matters set forth in the Amended Demand." Brown, the arbitrator, then stated that "the remaining [arbitration] hearing will not address the breach of contract claim, as that has been disposed of previously. The hearing will concern the claimant's that Asbury has been unjustly enriched and the claimant should recover $ 362,462.28 an [sic] extra contractual quantum meriuit [sic] recovery."

- 64 - Brown conducted hearings on the request for quantum meruit relief in October 1992 and January 1993. The transcripts of those hearings show that Brown ruled that, since there was no express and enforceable contract as to the claims for work performed under the invalid change order, a claim would lie for quantum meruit relief for the reasonable value of that work. On March 26, 1993, Brown issued an Award of Arbitrator (the March 1993 award), stating in part: ASBURY UNITED METHODIST CHURCH shall pay to TAYLOR & PARRISH, INC. the sum of TWO HUNDRED SIXTY-THREE THOUSAND THREE HUNDRED TEN DOLLARS AND NINETY-SEVEN CENTS ($ 263,310.97) . . . . The administrative fees and expenses of the American Arbitration Association and fees for the remuneration of the arbitrator shall be borne equally by the parties. . . . This Award is in full settlement of all claims submitted to this arbitration. Taylor asked the trial court to enter an order confirming the March 1993 award and entering judgment in its favor. In opposition to this request, the Trustees asked the trial court to confirm the arbitrator's decision of August 19, 1991, and to vacate the March 1993 award. The Trustees argued that the arbitrator had exceeded his powers, had misapplied the law, and did not have authority to consider quantum meruit relief. The trial court rejected the Trustees' arguments. In an opinion letter dated October 13, 1993, the trial court held that the arbitration clause in the contract was broad enough to encompass the issue of quantum meruit relief because that claim "arises out of, or relates to, the contract." The trial court further stated that the arbitrator had not exceeded the scope of the issues submitted to him by the order granting a second arbitration. The trial court declined to enter a proposed order in which Taylor requested judgment against the Trustees and the Church, jointly and severally. Instead, the trial court's order of November 2, 1993, recited that judgment was entered in favor of Taylor "against ASBURY UNITED METHODIST CHURCH" in the amount of $ 263,310.97 plus interest and one half of the fees and expenses of the American Arbitration Association and the fees of the arbitrator. Both Taylor and the Trustees have appealed from this order. I. The Trustees' Appeal The Trustees contend that the trial court erred in confirming the March 1993 award. They argue that the trial court was required to vacate the award under Code § 8.01- 581.010(3), because the arbitrator exceeded his powers in allowing recovery on a quantum meruit basis. The Trustees assert that the remedy of quantum meruit is available only when there is no express contract between the parties. In response, Taylor first argues that the Trustees have no standing to appeal from the trial court's order, because judgment was not entered against the Trustees, but against the Church. Taylor further contends that the trial court acted properly in construing the March 1993 award liberally and in conducting a limited review of the award. Taylor argues that, under the Construction Industry Arbitration Rules that were made a part of the contract, the arbitrator was empowered to "grant any remedy or relief that the arbitrator deems just and equitable and within the scope of the agreement of the

- 65 - parties." American Arbitration Association, Construction Industry Arbitration Rules, Rule 43 (rev. January 1, 1993). Initially, we address Taylor's argument that the Trustees have no standing to bring this appeal, because the trial court entered judgment only against the Church, in accordance with the March 1993 award. [Discussion omitted. Ed.] Turning to the merits of the Trustees' appeal, we first recognize that an "arbitration award 'must be construed liberally so as to uphold it, if possible.'" Howerin Residential Sales Corp. v. Century Realty of Tidewater, Inc., 235 Va. 174, 179, 365 S.E.2d 767, 770 (1988). Moreover, the party attacking an arbitrator's award bears the burden of proving the invalidity of the award. Id. The trial court's review of an arbitration award is governed by specific statutory criteria. Code § 8.01-581.010 provides, in material part, that "upon application of a party, the court shall vacate an award where: . . . 3. The arbitrators exceeded their powers." Here, the order of April 10, 1992, broadly referred to the arbitrator all matters stated in the Amended Demand, which included Taylor's request for quantum meruit relief. The trial court's referral of the quantum meruit request was void, however, because the trial court could not confer jurisdiction on the arbitrator to adjudicate disputes that were not based on the parties' contract. Arbitrators derive their authority solely from the parties' contractual agreement to arbitrate disputes arising under the contract. Thus, arbitrators exceed the scope of their authority when they purport to act beyond the terms of the contract from which they draw their authority. The contract between Taylor and the Church committed to the arbitrator's decision those "claims, disputes and other matters . . . arising out of, or relating to, the Contract Documents or the breach thereof." Paragraph 7.9.1. The term "Contract Documents" included only the parties' "Standard Form of Agreement," certain other specifically enumerated documents, and "all Modifications issued after execution of the Contract," including "a Change Order." Paragraphs 1.1, 16.2, and 1.1.1. A "Change Order," as defined by the contract, is "a written order to the Contractor signed by the Owner and the Architect . . . authorizing . . . an adjustment in the Contract Sum[, which] may be changed only by Change Order." In his decision of August 1991, the arbitrator ruled that the June 1990 change order had not been "signed by the Owner" because the individuals signing it had no authority to bind the Church as "Owner." This portion of the arbitrator's decision was confirmed by the trial court and, since Taylor did not object or assign error to this ruling, it has become the law of the case. See Medical Ctr. Hosps. v. Sharpless, 229 Va. 496, 498, 331 S.E.2d 405, 406 (1985). Thus, because the June 1990 change order was not among the "Contract Documents," Taylor's claim for quantum meruit recovery for the work performed under the invalid change order was not a claim "relating to the Contract Documents." By the parties' contract, claims not relating to the Contract Documents

- 66 - were not within the arbitrator's scope of authority.2 See Wild West Trading Co. v. gbs & h Architects, 881 P.2d 1070, 1074 (Wyo. 1994). In purporting to decide whether Taylor was entitled to payment for work that had not been performed in accordance with the contract, the arbitrator exceeded the scope of the authority granted him by the parties' contract. As this Court stated in Doyle & Russell, Inc. v. Roanoke Hospital Association, 213 Va. 489, 193 S.E.2d 662 (1973): The extent of the duty to arbitrate, just as the initial duty to arbitrate at all, arises from contractual undertakings. A party cannot be compelled to submit to arbitration unless he has first agreed to arbitrate. By the same token, he cannot be compelled to arbitrate a question which, under his agreement, is not arbitrable. Id. at 494, 193 S.E.2d at 666. Thus, we hold that the trial court erred in confirming that portion of the March 1993 award which found that Taylor was entitled to $ 263,310.97 plus interest based on the invalid change order. II. Taylor's Appeal We turn now to the single assignment of error raised by Taylor in its separate appeal. Taylor argues that the trial court erred in refusing to enter judgment against the Trustees and the Church, jointly and severally, as Taylor requested in its application to confirm the March 1993 award. We disagree. Code § 8.01-581.011 provides that, unless the trial court grants an application to modify or correct an arbitration award, "the court shall confirm the award as made." When the court grants an order confirming an award, "a judgment or decree shall be entered in conformity therewith." Code § 8.01-581.012. Taylor did not apply to the arbitrator or to the trial court to modify or correct the award, as provided in Code §§ 8.01-581.08 and 8.01-581.011. Moreover, Taylor did not name the Trustees in either of its demands for arbitration. Therefore, the trial court did not err in declining to enter a joint and several judgment which would not have conformed with the award and which impermissibly would have modified the award. In conclusion, we will reverse that portion of the trial court's judgment confirming the arbitrator's award of $ 263,310.97 plus interest to Taylor and enter final judgment. We will affirm that portion of the judgment rendered in favor of Taylor in the amount of one half of fees and expenses relating to the arbitration proceeding, as the Trustees have not advanced any argument that the trial court improperly confirmed that award of

2 In McMullin v. Union Land & Management Co., 242 Va. 337, 410 S.E.2d 636 (1991), we considered the scope of an arbitration clause contained in a partnership agreement and held that the clause was broad enough to cover a partner's claim for services. The issue in dispute was whether the claim conformed to a provision in the agreement stating that partners would be compensated for their services to the partnership only if the partners contracted for such compensation. We concluded that, "because the litigants must refer to that provision in resolving this controversy," the dispute fell within the language of the arbitration clause covering any claim "relating to this Agreement." Id. at 341-42, 410 S.E.2d at 639. The present case is distinguishable from McMullin because here there was no claim "relating to the Contract Documents" which the arbitrator was authorized to resolve. Once the arbitrator had decided that the June 1990 change order was invalid and thus was not among the "Contract Documents," and the trial court had confirmed this decision, neither the parties nor the arbitrator had any contract provisions to which they could refer in resolving Taylor's claim.

- 67 - costs. Finally, we will remand the case to the trial court for entry of a judgment order in favor of Taylor for a specific amount representing one half of the fees and expenses of the American Arbitration Association and the fees of the arbitrator.

Notes on Forming the Agreement to Arbitrate

Contract Law Governs. The law of contracts governs the question whether there exists a valid and enforceable agreement to arbitrate. Such an agreement must contain the essential elements of a valid contract at common law, and the question whether such a contract exists is a pure , to which a de novo standard of review is applied on appeal. A party cannot be compelled to submit to arbitration unless he has first agreed to arbitrate. When the question before the court is whether the parties have agreed to arbitrate, there is no presumption in favor of arbitrability. Rather, the party seeking arbitration has the burden of proving the existence of the agreement. Case law has focused on whether the party seeking enforcement of the purported contract objectively manifested its intention to be bound by the form contract. Mere silence when an agreement form has been submitted is insufficient to show its intention to be bound by the terms of a contract. See, e.g., Phillips v. Mazyck, 273 Va. 630, 643 S.E.2d 172 (2007)(citing cases).

Is there a Presumption in Favor of Arbitration. A presumption in favor of arbitrability arises only after the existence of such an agreement has been proved, and the remaining question is whether the scope of the agreement is broad enough to include the disputed issue. Mission Residential, LLC v. Triple Net Properties, LLC, 275 Va. 157, 654 S.E.2d 888 (2008).

Multiple Entities. Every corporation, limited liability entity or partnership with separate existence is an independent entity, and the agreement must be shown to exist with respect to any entity a party seeks to compel to participate in arbitration. Mission Residential, LLC v. Triple Net Properties, LLC, 275 Va. 157, 654 S.E.2d 888 (2008).

- 68 - D. Interpretation and Enforcement of the Arbitration Award; Preclusion and Re-Litigation

WATERFRONT MARINE CONSTR. v. NORTH END 49ERS SANDBRIDGE BULKHEAD GROUPS 251 Va. 417, 468 S.E.2d 894 (1996) [Some 22 landowners in the Sandbridge section of Virginia Beach entered a contract with the defendant construction company to build a wea-wall bulkhead along their properties. After engineering inspection disclosed problems the owners demanded arbitration. After a hearing, the arbitrators entered an award denying the owners' claim but ordering the construction company to perform certain work relating to the tie rod connections and anchor piles within 60 days. According to the terms of the award, the work had to be performed to the satisfaction of an independent engineer jointly hired and paid by the parties. Unfortunately, the parties could not even agree on an independent engineer. While bickering persisted, the "storm of the century" hit and knocked out much of the wall that had been constructed. The owners filed a second demand for arbitration which they characterized as "a continuation" of the previous arbitration case, and requesting that the same panel be assembled to hear the demand. They also sought punitive damages. The AAA determined, however, that the matter was "filed as a new matter" and that reconvening the members of the original arbitration panel required agreement of the parties. The AAA also noted that the construction company had raised an issue of "arbitrability" and stated "as a nonjudicial body, the Association cannot determine whether or not an issue is arbitrable. Therefore, we will proceed with further administration of this case, unless otherwise requested by both parties, or unless the moving party is stayed by court order." The construction company filed a motion in the trial court seeking a temporary injunction to stay the pending arbitration proceeding. The trial court entered an order referring the following matters to arbitration: 1) whether the dispute involving the first arbitration award was arbitrable; 2) whether res judicata was applicable to the claim; and 3) whether the owners were entitled to punitive damages. The arbitration panel determined that the dispute centering on enforcement of the first arbitration award was arbitrable. After a two-day hearing, the panel issued a second arbitration award that required the owners to pay the balance due from the first arbitration award and required the construction company to pay almost $500,000 for repair and replacement of the bulkhead and tie-back system, pre-arbitration costs, and property damage. The owners filed a motion in the trial court to confirm the second arbitration award, which the construction company opposed on the ground that the arbitrators exceeded their authority by addressing issues that should have been resolved by the court and resolving issues that were not arbitrable. After considering memoranda and argument of counsel, the trial court entered an order which essentially confirmed the award. The construction company appealed.]

I. DECIDING ARBITRABILITY WMC argues that the court, not the arbitrators, should determine whether a dispute is arbitrable. Therefore, it contends, the trial court erred when it referred to the arbitration panel the issue whether the compliance dispute was arbitrable. The 49ers maintain that Code § 8.01-581.02(B) restricts the trial court's role to considering only whether there is an agreement to arbitrate and that, in the absence of a specific agreement to the contrary, the arbitrators have the authority to resolve the issue of arbitrability. Because the existence of an arbitration agreement is not contested here, the

- 69 - 49ers conclude that the trial court properly referred the issue whether a dispute over the enforcement of the first award was arbitrable to the arbitration panel for resolution. A. THE STATUTE Contrary to the 49ers' assertion, Code § 8.01-581.02(B) authorizes the court to determine issues of arbitrability. That subsection provides in pertinent part: On application, the court may stay an arbitration proceeding commenced or threatened on a showing that there is no agreement to arbitrate. Such an issue, when in substantial and bona fide dispute, shall be forthwith and summarily tried and the stay ordered if found for the moving party. (Emphasis added). The 49ers contend that the phrase "agreement to arbitrate" means that once a party shows that there is a valid contract between the parties and that the contract provides for arbitration of disputes, the court must order arbitration, leaving to the arbitrators issues of specific claim arbitrability. The statute, however, has not been applied to limit the trial court's authority in the manner suggested. In two recent cases subject to the Uniform Arbitration Act, Code §§ 8.01-581.01 through -581.016, we have recognized the power of trial courts to resolve issues of arbitrability [citing Trustees v. Taylor & Parrish, and McMullin]. Thus, we state explicitly what was implicit in those cases: Code §8.01-581.02(B) authorizes the court to determine whether there is an agreement to arbitrate the specific controversy before the court, that is, to decide questions of arbitrability. Although the trial court is authorized by statute to resolve issues of arbitrability, the parties by their contract can agree that those issues be decided by the arbitrator. Thus, we must look to the parties' contract to see if such an agreement exists in the present case. B. THE CONTRACT The arbitration provision in the parties' contract in this case does not address the specific issue of who--the court or the arbitrator--shall determine arbitrability. In Doyle & Russell, Inc. v. Roanoke Hospital Ass'n, 213 Va. 489, 193 S.E.2d 662 (1973), we concluded that "it is the province of the courts to determine the threshold question of arbitrability, given the terms of the contract between the parties." Id. at 494, 193 S.E.2d at 666. We have also held that an arbitration clause which encompasses all controversies "arising out of" or "related to" the contract is very broad in its coverage. McMullin, 242 Va. at 341, 410 S.E.2d at 639. This case, however, presents an issue of first impression: whether the absence of specific language addressing who decides arbitrability reflects the parties' intent to include or exclude arbitrability determinations from the arbitrator's authority. The 49ers assert that the general policy favoring arbitration reflected in AT&T Technologies v. Communications Workers of America, 475 U.S. 643, (1986), and Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1 (1983), supports the conclusion that, in the absence of any clear expression in an arbitration agreement to the contrary, the issue of arbitrability is itself arbitrable and to be resolved by the arbitrators. In a recent case concerning the application of the Federal Arbitration Act, 9 U.S.C. §§ 1 through 14 (1982), however, the United States Supreme Court held that in deciding

- 70 - who determines questions of arbitrability, contractual silence or ambiguity is considered insufficient to give that authority to the arbitrators. First Options of Chicago v. Kaplan, 115 S.Ct. 1920, 1924-25 (1995). As the Supreme Court pointed out, when entering into an agreement to arbitrate, the parties surrender the right to have a court determine the merits of a controversy. Id. at , 115 S. Ct. at 1923. Although a court may review the arbitration award when confirmation, modification, or vacation is sought, the grounds for such relief are limited and do not include the merits of the award itself. Thus, whether the court or the arbitrator decides the question of arbitrability of a dispute "makes a critical difference" to the parties. Id. The Supreme Court observed that the parties to the contract "likely gave at least some thought to the scope of arbitration," id. at 1924, but may not have focused on either the "rather arcane" question of who would make that decision or the "significance of having arbitrators decide the scope of their own powers," id. at 1925. In light of these considerations, and because parties cannot be compelled to arbitrate those issues which they did not agree to submit to arbitration, the Supreme Court concluded that, in the absence of a clear agreement, parties should not be forced to submit matters to arbitration which they may have contemplated would be decided by a court. Id. We agree with the Supreme Court's rationale and conclusion in this regard. Furthermore, it is consistent with the principle enunciated in Doyle & Russell that a party "cannot be compelled to arbitrate a question which, under his agreement is not arbitrable." 213 Va. at 494, 193 S.E.2d at 666. Thus we hold that, in the absence of a clear agreement showing that the parties intended that the arbitrator decide questions of arbitrability, that question is to be resolved by the court. Accordingly, the trial court erred in declining to resolve the controversy relating to the arbitrability of the 49ers' second arbitration demand and in referring that matter to the arbitration panel for resolution.3 . . . . II. THE SECOND ARBITRATION DEMAND In their second demand for arbitration, the 49ers described the nature of the dispute as follows: Cost of repair necessary to bring the bulkhead to the condition demanded by the arbitrators in its Award dated February 12, 1991. Respondent performed none of the work, nor supplied the Bond required by the Arbitrators . . . On November 11, 1991, sections of the bulkhead collapsed. Failure to perform is breach of the contract containing an arbitration clause, breach of contractual warranty and breach of the guarantee in the Award.

3 Relying on statements made by the trial court at the May 7, 1993 hearing and in the letter opinion of the court referring to that hearing, the 49ers maintain that the trial court did decide the issue of arbitrability. However, a court speaks through its orders and we presume that the orders accurately reflect what transpired. Stamper v. Commonwealth, 220 Va. 260, 280-81, 257 S.E.2d 808, 822 (1979), cert. denied, 445 U.S. 972, 64 L. Ed. 2d 249, 100 S. Ct. 1666 (1980). The order of the trial court entered on September 20, 1993, specifically stated that "the issue of a failure to comply with the arbitration award is a matter for the arbitrators who will determine the arbitrability of that issue." Moreover, in submitting language to the court for inclusion in its order, WMC was not "inviting error" as the 49ers assert. WMC only sought to have the trial court's ruling accurately portrayed in the order. The trial court subsequently chose this language as its holding.

- 71 - The 49ers sought to recover the cost of repair "to bring the structure in compliance" with the previous arbitration award, the cost of emergency repair, property damage, and attorneys' fees. . . . A. FAILURE TO COMPLY Although the parties could have agreed that disputes over the compliance with a final arbitration award would be subject to arbitration, the contract does not expressly address the arbitrability of such controversies. See Menorah Ins. Co. v. INX Reinsurance Corp., 72 F.3d 218, 222 (1st Cir. 1995). Nevertheless, the contract does describe certain attributes of the award itself. According to the terms of the contract, the parties agreed that the award was to be "final," and that judgment "may be entered" on the award by a court. By allowing a judgment to be entered on the award, it is reasonable to assume that the parties were aware of the statutory provisions regarding court confirmation of the award, Code § 8.01-581.09, and providing that the court's order confirming the award can be enforced as "any other judgment or decree," Code § 8.01-581.012.4 Additionally, the parties presumably knew that an arbitrator has no power to enforce the award rendered. The statute provides a limited time within which the parties may ask the arbitrator to reconsider or modify the award. Code § 8.01- 581.08. After that time, the arbitrator has no further authority over the award and, in absence of agreement of the parties, the arbitrator becomes functus officio. Home Oil Co. of Hot Springs, Virginia v. Home Oil Co., 240 Va. 5, 8-9, 393 S.E.2d 188, 189-90 (1990). We do not dispute the 49ers' assertion that ambiguity in the scope of an arbitrability clause should be resolved in favor of arbitrating the claim. Considering the above factors, however, we conclude that the contract reflects the parties' understanding that the arbitration process would end with the arbitration award. Any further consideration of the award or action regarding compliance with it would be undertaken in a different forum. The 49ers also argue that the failure to comply with the first arbitration award is a breach of the construction contract because the parties agreed that an arbitration award would be binding. We reject this argument. We agree that the purpose of compulsory arbitration is that, in lieu of taking the matter to court, the parties will accept the arbitrators' award as a final resolution of the controversy. That understanding, however, does not anticipate that the only action a party may take is to comply with the award. The Act clearly contemplates that a party who disagrees with an award can file a pleading with a court to have it vacated or modified, albeit that the grounds for doing so are limited. Under the 49ers' reasoning, such a pleading would be a breach of the contract because by it the parties would be seeking to escape a binding award. We also reject the 49ers' assertion that we should interpret the clause, "claim or controversy arising out of or related to" broadly as we did in McMullin, and hold that the noncompliance with the award qualifies as a "claim or controversy" under the contract in this case. We do not retreat from our prior statements that an arbitration clause like the one in issue here is very broad; however, such clauses are not unlimited. In McMullin, we determined that the controversy proposed for arbitration was "related

4 While the first arbitration award at issue here was not confirmed by a court, that fact is irrelevant to the parties' intent at the time the contract was executed.

- 72 - to" the agreement, and therefore arbitrable, because the litigants had to refer to a provision of the contract to resolve the controversy. 242 Va. at 342, 410 S.E.2d at 639. McMullin, however, is distinguishable from the instant case. Here, the controversy regarding WMC's noncompliance relates solely to the terms of the first arbitration award; no provision of the construction contract need be construed or applied to resolve the controversy over noncompliance. Thus, we decline to adopt the construction of the phrase "arising out of or related to" urged by the 49ers because such a construction is far broader than any we have previously applied to the clause. The 49ers' claim in their second demand for arbitration, based on WMC's failure to comply with the terms of the first arbitration award, is nothing more than an action seeking compliance with the first arbitration award and damages for the failure to comply with that award. We conclude that such an action was not contemplated as an arbitrable controversy in the agreement between the parties. B. BREACH OF WARRANTY – RES JUDICATA In their second demand for arbitration, the 49ers also claim that WMC breached the warranties contained in Paragraph 3.5.1 of the contract. In that provision, the contractor warrants that the material and equipment furnished will be of good quality, that the work will be free from defects, and that the work will conform to the requirements of the contract documents. WMC does not dispute the arbitrability of this claim; however, WMC asserts that further arbitration of this claim is barred by the principle of res judicata because the 49ers made the same claim in their first demand for arbitration which was denied by the arbitrators. Res judicata is a judicially developed doctrine designed to end litigation and to protect the litigants from harassment. A plea of res judicata will be sustained if the prior adjudication was between the same parties or their privies and a valid final judgment was entered which resolved the claim on its merits. Bates v. Devers, 214 Va. 667, 670- 71, 202 S.E.2d 917, 920-21 (1974). When parties choose to resolve their disputes by arbitration rather than litigation, even though the resolution reached in that process does not require the application of legal principles, courts have applied the doctrine of res judicata to preclude subsequent litigation on issues resolved by validly issued arbitration awards. 1 Gabriel M. Wilner, Domke on Commercial Arbitration §31:02, at 452-53 (1984 & Supp. 1995); Restatement (Second) of Judgments § 84 cmt. b (1982). While we have not specifically addressed the applicability of the doctrine of res judicata to an arbitration award, this Court reviewed a trial court's dismissal of a garnishment action based on the res judicata bar of a confirmed arbitration award in Virginia Builders' Supply v. Brooks & Co., 250 Va. 209, 212, 462 S.E.2d 85, 87 (1995). On appeal, this Court reversed, not because res judicata did not attach to such awards, but because the parties to the arbitration agreement and award were not the same parties in the garnishment proceeding and, therefore, the elements of res judicata were not satisfied. Id. at 213-14, 462 S.E.2d at 88. The lack of any challenge to the trial court's ability to bar subsequent litigation by applying the doctrine of res judicata based on a prior confirmed arbitration award is readily understandable. Code § 8.01-581.012 provides that a judgment confirming an arbitration award is to be treated like any other judgment. Such treatment would include the application of res judicata.

- 73 - While res judicata may operate to bar subsequent judicial proceedings based on a prior confirmed arbitration award, here WMC seeks to bar a subsequent arbitration proceeding based on the res judicata effect of an unconfirmed arbitration award. These factual differences do not preclude application of the res judicata plea in this case, however. The parties have made no distinction between a confirmed and unconfirmed award. Therefore, we will assume, without deciding, that an unconfirmed arbitration award is treated in the same manner as a confirmed award for purposes of res judicata analysis.5 The parties also do not contest the power of res judicata to bar a subsequent arbitration proceeding. The 49ers, however, maintain that, in the absence of a specific agreement to the contrary, whether a prior award is given res judicata effect on a subsequent request for arbitration is itself arbitrable, and therefore, the trial court was correct in referring this issue to the arbitration panel. 1. Arbitrability of Res Judicata Plea Our review indicates. . . that other have concluded that a plea of res judicata is not subject to arbitration and the court, not the arbitration panel, determines whether a previous arbitration award operates as res judicata or collateral estoppel on a subsequent action or demand for arbitration. . . . We believe these jurisdictions reached the correct conclusion. First we note that arbitration is proper in this case only for controversies "arising from" or "relating to" the contract between the parties. The dispute over WMC's plea of res judicata arises from, or is related to, satisfying the elements of this common law doctrine; it does not arise from the terms of the contract. Thus, it is not arbitrable. More importantly, an arbitration panel is not generally bound by legal principles, does not have to explain or justify its decision, and the decision is not reviewed for legal errors. Rather, the arbitrators are entitled to make their decision based on what they deem to be just and equitable within the scope of the parties' agreement. AAA Construction Industry Arbitration Rule 43 (1993); G. Richard Shell, Res Judicata and Collateral Estoppel Effects of Commercial Arbitration, 35 UCLA L. Rev. 623, 633-37 (1988). Consequently, when considering a plea of res judicata, an arbitration panel could determine that the issues resolved in a prior arbitration should be revisited, regardless of whether the legal elements required for sustaining the plea were met. Allowing a plea of res judicata to be resolved by arbitration defeats the purpose of the judicially created doctrine -- to bring an end to the substantive controversy and to protect the parties from re-litigating previously decided matters. Accordingly, we conclude that, in the absence of a clear agreement to the contrary, a plea of res judicata is not arbitrable. Therefore, the trial court erred in directing the

5 A number of jurisdictions apparently do not distinguish between confirmed and unconfirmed awards for purposes of res judicata. See, e.g., Wellons, Inc. v. T.E. Ibberson Co., 869 F.2d 1166, 1169 (8th Cir. 1989). But see Gruntal & Co. v. Steinberg, 854 F. Supp. 324, 337-38 (D.N.J.) (unconfirmed arbitration award under statute has no preclusive effect), aff'd, 46 F.3d 1116 (3d Cir. 1994); Larsen v. Farmers Ins. Co., 80 Wash. App. 259, 909 P.2d 935, 940 (Wash. Ct. App. 1996) (unconfirmed arbitration award under law not equivalent to final judgment for collateral estoppel purposes). Even though the applicable statutes specifically provide that an arbitration award is only a separate contract between the parties until confirmed, at least two courts have afforded an unconfirmed award res judicata effect in a subsequent action. Pollock v. Marx, 171 Bankr. 218, 221-23 (Bankr. N.D. Tex. 1994); Thibodeau v. Crum, 4 Cal. App. 4th 749, 6 Cal. Rptr. 2d 27, 33-34 (Cal. Ct. App. 1992).

- 74 - arbitration panel to determine whether res judicata barred WMC's claim for breach of contractual warranty. However, we will not remand this issue for determination by the trial court because, like the issue of arbitrability discussed above, the record before us is sufficient to resolve the issue here. 2. Application of Res Judicata to Breach of Warranty Claim The original arbitration demand filed by the 49ers described the dispute as a breach of contract. The alleged breach, as explained by the 49ers' arbitration counsel, consisted of specific design and construction defects. The 49ers assert that the second demand claiming breach of warranty as a result of the damaged bulkhead was not identical to the first, and could not have been, because the bulkhead had not failed at the time of the first demand. . . . In this case, the legal rights asserted by the 49ers in the first arbitration action were based on its contractual right to construction of a bulkhead free of design or construction defects. The storm damage to the bulkhead after the first arbitration did not increase or alter the contractual rights the 49ers acquired at the time the contract was executed. Furthermore, no plans were altered and no work was performed on the bulkhead between the filing of the first and second demands for arbitration. The damages suffered as a result of the alleged defects may have increased when the bulkhead collapsed, but any defects in construction and design which existed at the time of the first arbitration had not changed at the time of the second demand for arbitration. Furthermore, even though the first demand described only specific defects, the doctrine of res judicata applies to all claims which could have been brought, thereby preventing a party from splitting his cause of action. Flora, Flora & Montague, Inc. v. Saunders, 235 Va. 306, 310-11, 367 S.E.2d 493, 495 (1988); Bates, 214 Va. at 670-71, 202 S.E.2d at 920-21. Here, the 49ers had engaged an engineer to evaluate the bulkhead prior to filing its first demand for arbitration. Their engineer reported that the design and construction of the bulkhead was deficient. In the first arbitration, the 49ers chose to limit the items of alleged deficient construction and design. Having made that choice, they are not entitled to bring forward additional items at a later date, particularly when, as set out above, there had been no further construction or design activity on the bulkhead between the two arbitration demands. The claim for breach of warranty asserted by the 49ers in their second arbitration demand was no different than the claim for breach of contract asserted in the first arbitration demand. Labeling the claim a breach of warranty rather than a breach of contract does not alter the nature of the claim. That label is a distinction without a difference. As pointed out by WMC, a breach of the warranty is a breach of the construction contract. Werner Sabo, Legal Guide to AIA Documents § 418, at 199 (3rd ed. 1989). The record demonstrates that the first arbitration was between the 49ers and WMC, and, as a result of that proceeding, a valid final arbitration award was entered rejecting the 49ers' claim for breach of contract due to defective design and construction of the bulkhead. Thus, we conclude that WMC met its burden of proof to sustain its plea of res judicata. The 49ers' demand for arbitration of their breach of warranty claim is barred by the first arbitration award under principles of res judicata.

- 75 - CONCLUSION In summary, the contract between the parties in this case did not specifically provide that questions of arbitrability and res judicata be submitted to arbitration. Therefore, the trial court erred in failing to resolve those issues and in referring them to the arbitration panel. Furthermore, the 49ers' claims in their second demand for arbitration relating to noncompliance with the first arbitration award are not arbitrable and their claim for breach of warranty is barred by res judicata. Accordingly, we will reverse the judgment of the trial court confirming the second arbitration award and enter judgment in favor of WMC. The judgment will be without prejudice to the parties' rights in connection with the first arbitration award. Reversed and final judgment.

- 76 - Notes on Arbitration Awards

Construction of Arbitration Awards. The Supreme Court of Virginia has held that an award made in arbitration, being the judgment of a judge of the parties' own choosing, ought to be favorably viewed by the courts; and effect ought to be given to it by them, whenever it can be done consistently with the rules of law. Virginia Beach Bd. of Realtors, Inc. v. Goodman Segar Hogan, Inc., 224 Va. 659, 299 S.E.2d 360 (1983). Mistakes and Other Challenges to the Award. Would the approach of McMullin and Trustees above suggest that deference would be given to arbitrators in determining what "arises out of" or "relates to" the agreement? A separate strain of older Virginia law (numerous decisions prior to the year 1900) had allowed for judicial review of arbitration awards where the arbitrators allegedly had reached out to decide matters not properly submitted for decision by them. This form of attack is preserved in the present Act, though no case in the last 75 years has presented the issue for judicial gloss. See Code § 8.01-581.11(2).

- 77 -

E. Challenges to Arbitration Awards or Arbitrability

SIGNAL CORP. v. KEAN FEDERAL SYSTEMS 265 Va. 38, 574 S.E.2d 253 (2003)

[A contractor performing information technology services for a federal agency engaged a subcontractor for part of the work, under an agreement with an arbitration clause and a "no-hire provision" barring the contractor from employing or soliciting any of the subcontractor's personnel during the period of subcontract performance and one year thereafter. The contractor terminated the subcontract and shortly thereafter hired 22 employees of the subcontractor. The subcontractor initiated an arbitration proceeding alleging wrongful termination of the agreement and civil conspiracy. A panel of three arbitrators conducted a lengthy hearing and unanimously concluded that the contractor breached the subcontract. A majority of the panel also concluded that the contractor violated the civil conspiracy statutes. The subcontractor was awarded treble damages in the amount of $6,883,029 and attorney's fees. The contractor filed an application in the circuit court to vacate, modify or correct the arbitration award under Code § 8.01-581.010. The court denied such relief, and entered an order confirming the arbitrators' award. The contractor appealed.]

CHIEF JUSTICE HASSELL delivered the opinion of the Court: . . . the arbitration panel conducted a hearing over the course of five days, considered 139 exhibits, and issued a very lengthy opinion. . . SIGNAL argues that "the circuit court erred as a matter of law by failing to vacate [the] arbitration award [because] the arbitrators exceeded their powers by rewriting the subcontract." Continuing, SIGNAL contends that the arbitration panel erroneously applied "the general law of contracts" to determine whether SIGNAL's termination of the subcontract was proper. SIGNAL asserts that the arbitration panel failed to apply the unambiguous standard for termination expressly contained in the termination clause of the subcontract. . . [The contractor also argued that the arbitrators' decision flatly contradicted the express terms of an "option contract" entered along with the subcontract. Ed.] Keane Federal Systems responds that the arbitrators did not exceed their powers and that the parties' contract conferred upon the arbitration panel the broad authority to decide "[a]ny dispute arising under or related to this subcontract with respect to the rights, duties or obligations of the parties. . . ." We agree with Keane Federal Systems... A circuit court's review of an arbitration award is limited to the specific statutory criteria contained in Virginia's Uniform Arbitration Act. See Trustees of Asbury United Methodist Church v. Taylor & Parrish, Inc., 249 Va. 144, 153, 452 S.E.2d 847, 852 (1995). Essentially, SIGNAL argues that the arbitrators exceeded their powers because they purportedly applied the wrong legal standard in the resolution of the contract claim. We express no opinion regarding the correctness of the arbitrators' legal analysis. The issue

- 78 - before this Court is not whether the arbitrators' conclusions were legally correct, but rather, whether the arbitrators had the power to resolve the parties' contractual claims. We hold that the arbitrators did not exceed their powers because the issues that they resolved were within the scope of the powers conferred upon the arbitrators by the subcontract. The express language contained in the subcontract that the parties executed specifically conferred upon the arbitrators the authority to resolve "[a]ny dispute arising under or related to this subcontract with respect to the rights, duties or obligations of the parties, which is not disposed of by mutual agreement . . . ." The parties' contractual dispute is within the scope of this broad language. Therefore, neither the circuit court nor this Court may review the merits of the arbitrators' decision. A contrary conclusion would permit a dissatisfied party, who by agreement voluntarily submitted to arbitration, to invoke the jurisdiction of a circuit court in an effort to relitigate the merits of the controversy already decided by the arbitrators. We recognize that in Trustees v. Taylor & Parrish, Inc., we held that an arbitrator exceeded his power because he acted beyond the terms of a contract that contained the arbitration agreement by resolving a claim that did not relate to the contract. We applied Code § 8.01-581.010 and invalidated the arbitration award. 249 Va. at 153-54, 452 S.E.2d at 852-53. In the present appeal, unlike the circumstances in Trustees v. Taylor & Parrish, Inc., SIGNAL does not assert that the arbitrators resolved a dispute that was beyond the scope of the arbitration agreement contained in the subcontract. We also observe, with approval, the Supreme Court of 's admonition that "an allegation that the arbitrators have exceeded their powers must be carefully evaluated in order to assure that this claim is not used as a ruse to induce the court to review the merits of the arbitrators' decision." Gordon Sel-Way, Inc. v. Spence Bros., Inc., 475 N.W.2d 704, 710 (Mich. 1991). B. SIGNAL argues that "the circuit court erred by failing to vacate the trebling of the award based upon the majority's exceeding its authority and its manifest disregard of the Virginia Conspiracy Statute." SIGNAL argues that the panel exhibited a " 'manifest disregard of the law' in finding statutory conspiracy in the absence of concerted action." We disagree with SIGNAL. As we have already held, pursuant to the arbitration provision contained in the subcontract, the arbitrators had the power to adjudicate any dispute arising under or related to the performance of the subcontract. This provision is broad enough to include Keane Federal Systems' civil conspiracy claims. And, as we have already stated, even though we may not agree with the arbitration panel's application of the law, the issue before this Court is whether the arbitrators exceeded their powers, and we are compelled to conclude that they did not do so. Even though courts in other jurisdictions have vacated arbitration awards when there has been a "manifest disregard of the law," we refuse to adopt that standard in this case because to do so would require that this Court add words to Code § 8.01-581.010, which enumerates the bases on which a court shall vacate an arbitration award. Conspicuously missing from this statute is a provision that permits a court to vacate a judicial award when the arbitration panel has exhibited a "manifest disregard of the law." In this Commonwealth, courts are required to apply the plain meaning of statutes, and we are not free to add language, nor to ignore language, contained in statutes. . .

- 79 - SIGNAL assigns as error that "the Circuit Court erred by not modifying or correcting an arbitration decision that included damages based upon evident miscalculations of figures and evident mistakes in the description of the damages referred to in the award." SIGNAL, however, did not make this argument in its motion to vacate or in its memorandum submitted in the circuit court. SIGNAL argued in the circuit court that "the panel's damages award is arbitrary and irrational." In this Court, SIGNAL argues that the circuit court was required to modify or correct the arbitrators' award because the award "contains evident mistakes and palpable errors with no rational basis." We will not consider SIGNAL's arguments because we conclude that they are procedurally barred. Code § 8.01-581.011 permits a circuit court to modify or correct an award when "[t]here was an evident miscalculation of figures or an evident mistake in the description of any person, thing or property referred to in the award." SIGNAL, however, did not raise this issue in the circuit court and, therefore, may not raise this issue for the first time on appeal. Rule 5:25. SIGNAL may not raise its contention that the panel's award is arbitrary and irrational because that argument is not the subject of an assignment of error. We conclude that SIGNAL's arguments lack merit and, therefore, we will affirm the judgment of the circuit court.

- 80 - LACKMAN v. LONG & FOSTER REAL ESTATE 266 Va. 20, 580 S.E.2d 818 (2003)

JUSTICE LACY delivered the opinion of the Court: In this appeal, Frank X. Lackman, t/a Frank X. Lackman, Broker, (Lackman) seeks reversal of a judgment confirming an arbitration award. . . Because none of the various grounds Lackman asserts in support of reversal is meritorious, we will affirm the judgment of the trial court. BACKGROUND Long & Foster Real Estate, Inc., Patricia Lawless, Reggie Copeland (collectively "Long & Foster"), and Lackman are real estate brokers and members of the Northern Virginia Association of Realtors, Inc. (the Association). Members of that Association agree to submit disputes arising out of the real estate business to arbitration in accordance with the rules and regulations of the Association. In January 2001, Long & Foster filed a Request and Agreement to Arbitrate with the Association claiming that they were entitled to a $19,500 commission which Lackman received in connection with an earlier sale of property. Lackman filed a Response and Agreement to Arbitrate, denying that Long & Foster was entitled to any commission. The issue presented to the arbitration panel was whether Lackman was the procuring agent in the sale of the property which generated the contested commission. Following an evidentiary hearing, the arbitration panel entered an AWARD OF ARBITRATORS, directing Lackman to pay Long & Foster the $19,500 commission. Lackman filed an amended bill of complaint against Long & Foster seeking vacation of the arbitration award. In Counts I through V, Lackman asserted that the award should be vacated on four of the statutory grounds enumerated in Code § 8.01- 581.010. In Count VI, Lackman asserted that the trial court should use its equity powers to enjoin enforcement of the award because the arbitrators' actions prevented him from relying on his theory that the defendants engaged in fraudulent conduct and from relying on principles of estoppel and unclean hands. Prior to trial, the trial court struck Count VI, holding that Code § 8.01-581.010 was the exclusive means for vacating an arbitration award. Following an evidentiary hearing, the trial court found the evidence insufficient to support vacation of the arbitration award under any of the grounds identified in subsections (1) through (4) of Code § 8.01-581.010, and entered an order confirming the award. The trial court also awarded attorneys' fees to Long & Foster. . . . Code § 8.01-581.010 Lackman first claims that Long & Foster engaged in fraudulent conduct in conjunction with the sale of the property and that such fraudulent conduct supports vacation of the award under subsection (1) of Code § 8.01-581.010. That provision, however, allows vacation of an award if the award was procured by fraud. Lackman's

- 81 - allegation regarding fraudulent conduct in connection with the sale of the property does not address procurement of the arbitration award and, therefore, cannot form a basis for vacation of the award under subsection (1) of Code § 8.01-581.010. Lackman next argues that the arbitrators were not impartial, refused to hear material evidence, and refused to allow certain cross-examination. This conduct, Lackman asserts, rises to the level of misconduct and supports vacation of the award under subsections (2) and (4) of Code § 8.01-581.010, and violates Code § 8.01- 581.04(2). The record of the arbitration hearing, however, precludes Lackman from prevailing on these claims. As noted by the trial court, at the close of the arbitration hearing the panel chairperson asked both parties whether the hearing had been conducted fairly. Lackman responded affirmatively. Similarly, Lackman raised no objection when the chairperson stated at the end of the proceeding that "the claimant and the respondent have indicated that they have had an adequate opportunity to testify and present evidence and , and conduct cross examination." Moreover, review of the colloquy involving the disputed cross-examination testimony shows that the arbitration panel thought that the disputed testimony implicated an ethics violation, a matter not relevant to the arbitration proceeding. The record is devoid of any final ruling by the panel on that issue, any further questioning by Lackman following the colloquy, or any objection by Lackman to the panel's actions or failure to rule on the matter. This record clearly supports the trial court's determination that Lackman did not carry his burden to demonstrate that the arbitrators showed evident partiality or that he was precluded from presenting material evidence or engaging in cross-examination. Finally, Lackman asserts that in making the award, the arbitration panel disregarded provisions of the underlying contract between the parties. This failure, according to Lackman, was "tantamount to fraud," and exceeded the powers of the arbitration panel. Lackman relies on a number of cases for the proposition that arbitrators exceed their powers, or engage in fraud or misconduct, if they fail to apply the terms of the underlying contract. These cases are neither dispositive nor persuasive because they either were decided prior to the enactment of Code § 8.01-581.010 or involved questions not presented in this case.6 Included in Code § 8.01-581.010, adopted in 1986, is the statement that "the fact that the relief was such that it could not or would not be granted by a court of law or equity is not grounds for vacating . . . the award." Therefore, whether an arbitration panel applies the contract between the parties in a manner consistent with its terms is not a matter for consideration by the trial court or this Court when reviewing an arbitration award. "A contrary conclusion would permit a dissatisfied party, who by

6 Vulcan Chem. Techs., Inc. v. Barker, 167 F. Supp. 2d 867, 871 (W.D. Va. 2001) (applying Federal Arbitration Act, 9 U.S.C § 10, and federal law allowing vacation of arbitration award "if it shows manifest disregard of applicable law"), vacated sub nom. Vulcan Chem. Techs., Inc. v. Barker, 297 F.3d 332 (4th Cir. 2002); Trustees of Asbury United Methodist Church v. Taylor & Parrish, Inc., 249 Va. 144, 153, 452 S.E.2d 847, 852 (1995) (basing award on "quantum meruit," a basis not within the parties agreement); United Paperworkers Int'l Union v. Chase Bag Co., 222 Va. 324, 328, 281 S.E.2d 807, 810 (1981) (applying former Code § 8.01-580 which allowed vacation of award for "errors apparent on its face"); and Mills & Fairfax v. Norfolk & Western R.R. Co., 90 Va. 523, 531-32 19 S.E. 171, 174 (1894) (applying instructions in contract for making arbitration decision).

- 82 - agreement voluntarily submitted to arbitration, to invoke the jurisdiction of a circuit court in an effort to relitigate the merits of the controversy already decided by the arbitrators." Signal Corp. v. Keane Fed. Sys., Inc., 265 Va. 38, 45, 574 S.E.2d 253, 257 (2003). Correct application of the contract terms pertaining to that sale, while perhaps pertinent to the result reached by the arbitrators, is not pertinent to determining whether the arbitrators exceeded their powers under Code § 8.01- 581.010(3). The relevant inquiry for that determination is whether the issues resolved were within the scope of authority granted the arbitrators in the agreement to arbitrate. No such claim has been made in this case. Lackman also asserts that interpreting Code § 8.01-581.010 to allow the arbitrators to "ignore the contract between the parties," renders the statute unconstitutional. This assertion again ignores the fact that the issue before the arbitration panel was whether Lackman was the procuring source for the sale of the property. Moreover, when agreeing to submit a claim to arbitration, the parties also agree that the decision reached by the arbitrators will not be set aside by a court based on traditional legal principles but only on those grounds set out in the statute. A contractual agreement by the parties to abide by both the rules of arbitration and the arbitrators' decision does not render Code § 8.01-581.010 unconstitutional. Accordingly, the trial court did not err in rejecting Lackman's contention that the award should be vacated because it was procured by fraud, because the arbitrators engaged in misconduct, or because the arbitrators exceeded their powers. Equity Power Lackman asserts that the procedure in Code § 8.01-581.010 is not the exclusive method for vacating an arbitration award, and, therefore, the trial court erred in striking Count VI of his amended bill of complaint in which he invoked the trial court's equity powers to enjoin enforcement of the arbitration award based on his equitable defenses of fraud, estoppel, and unclean hands. We disagree. The predecessor to the current statute, former Code § 8.01-580, specifically stated that the section "shall not be construed to take away the power of courts of equity over awards." This provision continued the traditional authority of equity courts to review arbitration awards based on a "submission in pais." See e.g. Edge Hill Stock Farm, Inc. v. Morris, Gray & Hunter, 155 Va. 103, 108, 154 S.E. 473, 474 (1930). The General Assembly eliminated this provision when it enacted Code § 8.01-581.010 in 1986. Elimination of the provision terminated the ability of a court to invoke its equity powers when reviewing an arbitration award. Thus, Code § 8.01-581.010 provides the exclusive means for setting aside an arbitration award, and the trial court correctly struck Count VI of Lackman's amended bill of complaint. See Signal Corp., 265 Va. at 45, 574 S.E.2d at 257.

- 83 - - 84 - Discussion Problem

A collective bargaining agreement was in effect at the time of the labor dispute in issue. Under the agreement, an employee was required to present a grievance to his shop steward, a union official, "in writing within five (5) days from the date [the grievance] was found to exist by the employee or the Union." The shop steward was then required to present the grievance to the Company's supervisory representative "within three (3) working days or the matter [would be] considered settled." In the event the grievance was not settled, the parties could submit the dispute to arbitration "if it involve[d] the application or interpretation of the terms of [the] Agreement." While the arbitrator could not "add to, subtract from, terminate or modify any of the terms of the Agreement," his decision as to the application or interpretation of the agreement's terms would be "final and binding upon the Employer, the Union and all Employees concerned." On April 26th a severe storm damaged the Company's plant. Claiming that the storm threatened their safety, an unspecified number of employees walked off their jobs. On Thursday, April 27 the Company disciplined several employees and notified them of its actions. On Friday, April 28, one employee not previously notified received notice. On Thursday, May 4, three grievances were filed with a shop steward. On Friday, May 5, five additional grievances were filed with a steward, and the eight grievances were presented that day to the Company's representative. On Monday, May 8, nine additional grievances were filed with a steward, who presented them to the Company's representative the same day. Ultimately, the grievances were submitted to an arbitrator. Apparently concluding that a grievance would be timely filed if presented to the Company within eight days, regardless of when it had been filed with the shop steward, the arbitrator rejected the Company's claim of employee tardiness in filing the grievances. Then, turning to the merits, the arbitrator vacated all disciplinary action taken against the employees. Following the arbitrator's decision, the Company brings a suit seeking to set aside the award on the grounds that the arbitrator had erroneously calculated the time periods for filing grievances and had ignored the requirement that grievances be submitted to a shop steward within five days. Counsel for the Union agrees that "the arithmetic computations of the arbitrator regarding the period of time within which the grievances were required . . . to be presented in writing to a shop steward, were incorrect, and that the grievances had not been presented to a shop steward in writing within five days from the date they were found to exist," as provided in the agreement. The company contends that arbitrator's award could be set aside at common law upon a finding of “palpable error is apparent on its face.” The Union argues that the alleged "error apparent," viz., the arbitrator's holding that the grievances were timely even though not filed within the initial five-day period, was not a palpable error, but a "trifling matter." However, the company notes that the requirement is an obvious limitation upon the right of an employee to assert a grievance, and the Company surely has an interest in compliance with the requirement. A "palpable" error is one that is obvious and easily perceptible. Black's Law Dictionary 1000 (5th ed. 1979). In Hollingsworth v. Lupton & Wife, 18 Va. (4 Mun.) 114, 117 (1813), the Supreme Court of Virginia characterized palpable errors as those of such "a nature, as to induce a belief

- 85 - that they must have proceeded from some improper bias in the minds of the arbitrators, or from some gross misbehavior or inattention." Another case from the 1800's said that the "rule as to palpable mistakes does not comprehend errors of judgment in its fair exercise upon the matter." Bassett's Adm'r v. Cunningham's Adm'r, 50 Va. (9 Gratt.) 684, 688 (1853). The company argues that the arbitrator's disregard of the five-day filing requirement in this case, however, was not a mere error of judgment but resulted from "gross . . . inattention" to the collective bargaining agreement's unambiguous provisions. Hollingsworth, 18 Va. (4 Mun.) at 117. ISSUE: when these facts arose, the current statutes had not been enacted. The Supreme Court held in United Paperworkers Int'l Union v. Chase Bag Co., 222 Va. 324, 328, 281 S.E.2d 807, 810 (1981) that the award would be vacated for "errors apparent on its face". Are the company’s arguments completely foreclosed by the Signal and Lackman decisions?. Should there not be SOME remedy for arbitrators running amok?

Further Notes on Arbitration Hearings

Hearing Requirement. The Act requires in Code § 8.01-581.04(1) that arbitrators, unless otherwise provided by an agreement, appoint a time and place for the hearing and cause notification to the parties to be served personally or by registered mail not less than five days before the hearing. Code § 8.01-581.04(2) further provides that the parties are entitled to be heard, to present evidence material to the controversy and to cross-examine witnesses appearing at the hearing. Under Code § 8.01-581.05, a party also has the right to be represented by an attorney at any hearing conducted under the Act. In one illustrative case, a landowner and the proprietor of a logging operation entered a written timber sale agreement with an arbitration provision. During the timber harvest, a dispute arose about the cutting operation. Each party selected an arbitrator, and the timber cutter sued the landowner. Eventually the trial court entered an order appointing a third arbitrator agreeable to the parties. The order provided that the parties would be advised of the hearing date of the arbitration, with a minimum of 10 days prior notice, and stated that the arbitration was to be conducted in accordance with the arbitration provisions of the Virginia Code. Both parties asked for entry of that order. The third arbitrator met with the landowner for approximately two hours and viewed areas on the property allegedly affected by the timber cutting. The landowner also provided some information to the arbitrator he had originally selected. Approximately six months after the third arbitrator's appointment, he and the arbitrator originally designated by the logging operator issued a joint letter setting forth their resolution of the dispute. The landowner party filed a motion to vacate the award and to appoint new arbitrators to hear and decide the dispute, asserting that the arbitrators had not conducted the arbitration in accordance with the circuit court's order and Virginia's Uniform Arbitration Act, Code §§ 8.01-581.01 through -581.016, (the Act). At a hearing, the parties stipulated that there was no hearing before the arbitrators, no

- 86 - opportunity to present witnesses, and no opportunity to cross-examine witnesses or be represented by counsel. The circuit court denied the motion to vacate, and entered an order confirming the arbitrators' award. On appeal the Supreme Court noted that Code § 8.01-581.010 provides the exclusive circumstances under which a circuit court can vacate an arbitration award. Code § 8.01-581.010(4) provides that a circuit court shall vacate an arbitration award when "[t]he arbitrators refused to postpone the hearing upon sufficient cause being shown therefor or refused to hear evidence material to the controversy or otherwise so conducted the hearing, contrary to the provisions of § 8.01-581.04, in such a way as to substantially prejudice the rights of a party[.]" The Supreme Court has held that the repeated use of the term "the hearing" in Code § 8.01-581.010(4) presupposes that the arbitrators conducted a hearing. However, as the parties stipulated, there was no hearing before the arbitrators in this case. Without "the hearing" having taken place, it was not necessary for the landowner to prove that his rights were "substantially prejudice[d]" or that evidence he would have presented was "material to the controversy" in order to have the arbitration award vacated under Code § 8.01-581.010(4). In short, the failure to conduct "the hearing" clearly intended by the terms of Code § 8.01-581.04, unless otherwise provided by an agreement, and by the provisions of Code § 8.01-581.010(4), is tantamount to no arbitration. The Court rejected arguments that a party must show that he suffered prejudice as a result of the informal manner in which the arbitrators conducted the proceeding, or that he is estopped or waived his rights to complain about the arbitrators' failure to conduct a formal hearing because he participated in the informal process by meeting with and/or supplying information to two of the three arbitrators and by failing to request a formal hearing before the arbitrators. See Bates v. McQueen, 270 Va. 95, 613 S.E.2d 566 (2005) (Arbitrators appointed to consider a dispute under a timber sale agreement failed to conduct a hearing, and it was error for the trial court not to vacate their award because a hearing is required by the terms of Code §§ 8.01-581.04 and -581.010(4)).

- 87 - Is There an Arbitrable Dispute ?

AMCHEM PROD v. NEWPORT NEWS ASBESTOS PLAINTIFFS 264 Va. 89, 563 S.E.2d 739 (2002)

JUSTICE HASSELL delivered the opinion of the Court: In this interlocutory appeal, we consider whether the circuit court erred by refusing to require the litigants to resolve their purported dispute in accordance with an arbitration provision in a contract. I. Five hundred and ninety-seven individual plaintiffs filed in the circuit court against certain asbestos manufacturers and/or distributors, including the defendants, Amchem Products, Inc., C.E. Thurston and Sons, Inc., and Dana Corporation. The plaintiffs, who included personal representatives of the estates of certain decedents, alleged that they, or their decedents, sustained personal injury or that their decedents died as a result of exposure to asbestos. The defendants are members of the Center for Claims Resolution, a Delaware corporation composed of companies formerly engaged in the manufacture, sale, and/or distribution of asbestos and products that contain asbestos. The Center for Claims Resolution was created for the express purpose of evaluating, negotiating, litigating, and settling asbestos- related personal injury and property damage claims against its members. In July 2000, the Center for Claims Resolution and its members entered into a Master Settlement Agreement with the plaintiffs in this appeal. Pursuant to the terms of the Master Settlement Agreement, the members of the Center for Claims Resolution agreed to settle each plaintiff's claims against its members for sums specified in the Master Settlement Agreement. The Master Settlement Agreement states in part that "this Settlement Agreement is made by and between the members of the Center for Claims Resolution, specifically, Amchem Products, Inc., Armstrong World Industries, Inc., The Asbestos Claims Management Corporation (formerly known as National Gypsum Company); . . . C.E. Thurston & Sons, Inc.; Dana Corporation;" and certain law firms. The Master Settlement Agreement, dated July 2000, contained the following provision in paragraph 5(b): "To encourage the resolution of disputes without the need for arbitration, counsel for the parties shall meet face to face at least twice per year, and seven days prior to each meeting, the parties shall exchange a list of the disputed issues and/or individual cases and the pertinent information regarding those cases or issues. If counsel are unable to resolve any dispute arising under this agreement, including either its interpretation or application, the matter shall be referred to the McCammon Mediation Group, which shall appoint an independent arbitrator to resolve the matter. In each case, the decision of the arbitrator shall be final and binding upon the parties, and the cost of arbitration, including the arbitrator's fees and expenses, shall be borne equally by the parties, and each party shall bear its own attorneys' fees."

- 88 - On October 16, 2000, Michael Rooney, chief claims officer for the Center for Claims Resolution, forwarded a letter to counsel for the plaintiffs. This letter modified the Master Settlement Agreement and stated in relevant part: "Pursuant to the Master Settlement Agreement between the Center for Claims Resolution and the law firms of Patten, Wornom, Hatten & Diamonstein, L.C., and Glasser & Glasser, P.L.C., for the resolution of qualified cases . . . the [Center for Claims Resolution] understands and consents that plaintiff's counsel intends to make payment to all of these qualified plaintiffs in three equal installments rather than in full to three separate groups . . . . Specifically, the [Center for Claims Resolution] understands that plaintiff counsel intends to pay each qualified plaintiff the settlement values set forth in Paragraph 2 of the agreement in three equal installments - the first of which is due on or about October 30, 2000, the second is due on or about April 30, 2001, and the third is due on or about October 30, 2001. "Each settling plaintiff will execute a release to the [Center for Claims Resolution] for the full amount of the settlement prior to receiving the first installment; however, it is specifically understood and agreed that these releases are not evidence of full satisfaction of the contractual obligation of the [Center for Claims Resolution] to pay the qualified plaintiffs the settlement values that have been agreed upon, and should the [Center for Claims Resolution] fail to timely make any or all of the payments required by the Master Settlement Agreement, then in that event each settling plaintiff who has not received full payment may pursue a remedy in contract against the [Center for Claims Resolution] members for any deficiency. If such action is required, the [Center for Claims Resolution] members shall be responsible to pay the deficiency with interest at 8% per annum, and the[Center for Claims Resolution] members will reimburse each such settling plaintiff for reasonable attorneys' fees and expenses that may be required to collect this deficiency by or otherwise. "This remedy in contract on the release will be the sole of each plaintiff who has executed a release for the full consideration of his settlement but fails to receive timely payment in full." The plaintiffs' claims were accepted by the Center for Claims Resolution under the Master Settlement Agreement as modified, and each plaintiff executed a release absolving all the Center for Claims Resolution members from any liability. Prior to the date that the Center for Claims Resolution was required to make the payments specified in the Master Settlement Agreement, two of its members defaulted on their obligations to pay their prescribed share of the payments. The Asbestos Claims Management Corporation declared itself insolvent and failed to pay its obligations. Armstrong World Industries, Inc., filed a petition in and also defaulted on its settlement obligations. In January 2001, the Center for Claims Resolution forwarded a check to plaintiffs' counsel that represented the amounts due from the Center for Claims Resolution member companies other than the Asbestos Claims Management Corporation and Armstrong World Industries, Inc. Subsequently, the plaintiffs filed a "Motion To Enforce Settlement Agreement" in the circuit court. The plaintiffs asserted that the Center for Claims Resolution and its

- 89 - member companies are individually, jointly, and severally liable to the plaintiffs for the payments due under the Master Settlement Agreement, and interest and attorneys' fees permitted by the agreement, including the October 16, 2000 modification. The defendants, relying upon paragraph 5(b) of the Master Settlement Agreement, asserted that a dispute existed and, therefore, the plaintiffs were required to submit their claims to binding arbitration as required by the Federal Arbitration Act and the Virginia Arbitration Act. The circuit court denied the defendants' motion to compel arbitration, and the defendants filed an interlocutory appeal from that order. II. Initially, we observe that this Court has jurisdiction to decide whether the plaintiffs' claims are subject to the arbitration agreement. Code § 8.01-581.01 states in part that "[a] written agreement to submit any existing controversy to arbitration or a provision in a written contract to submit to arbitration any controversy thereafter arising between the parties is valid, enforceable and irrevocable, except upon such grounds as exist at law or in equity for the revocation of any contract." Code § 8.01-581.02 confers upon a circuit court the power to compel or stay arbitration proceedings. Code § 8.01- 581.016 confers upon this Court jurisdiction to review a circuit court's order that denies or compels arbitration. C. Our resolution of this appeal is governed in part by the Federal Arbitration Act because the Master Settlement Agreement, as modified by the October 2000 letter, "involved interstate commerce." Thus, we must apply the federal substantive law to determine whether the parties must submit to binding arbitration as required by the contract. Allied-Bruce Terminix Cos. v. Dobson, 513 U.S. 265, 268-70(1995); see 9 U.S.C. § 1, et seq. (2000). Therefore, we must apply the following federal principles. The question whether a party has agreed to arbitrate a particular issue is a matter of contract interpretation. The Supreme Court has stated that a "party cannot be required to submit to arbitration any dispute which he has not agreed so to submit." United Steelworkers of America v. Warrior & Gulf Navigation Co., 363 U.S. 574, 582 (1960). The Federal Arbitration Act contains "a congressional declaration of a liberal federal policy favoring arbitration agreements, notwithstanding any state substantive or procedural policies to the contrary. The effect of [ § 2 of the Act] is to create a body of federal substantive law of arbitrability, applicable to any arbitration agreement within the coverage of the Act." Moses H. Cone Memorial Hospital v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983). The Supreme Court has stated that the Federal Arbitration Act "establishes that, as a matter of federal law, any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration, whether the problem at hand is the construction of the contract language itself or an allegation of waiver, delay, or a like defense to arbitrability." Id. at 24¬25 (footnote omitted). This strong presumption of arbitrability mandates that a court must require the parties to submit to arbitration if the scope of an arbitration clause subject to the federal act is open to question. American Recovery Corp. v. Computerized Thermal Imaging, Inc., 96 F.3d 88, 92 (4th Cir. 1996). The Supreme Court has held that a court must compel parties to arbitrate pursuant to the terms of an agreement covered by the federal Act "unless it may be said with

- 90 - positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute." Warrior & Gulf Navigation Co., 363 U.S. at 582-83. However, in determining whether a contractual dispute exists that is subject to arbitration, we must review the language contained in the Master Settlement Agreement and the October 2000 modification to ascertain the meaning of these documents, and in making this determination, we must apply the substantive contract law of this Commonwealth. The question "whether a party agreed to arbitrate a particular dispute is an issue for judicial determination to be decided as a matter of contract." Johnson v. Circuit City Stores, Inc., 148 F.3d 373, 377 (4th Cir. 1998); accord AT&T Technologies, Inc. v. Communications Workers of America, 475 U.S. 643, 648-49(1986). In making this determination, the courts should apply "ordinary state-law principles that govern the formation of contracts." First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944 (1995). D. The litigants agree that the letter that the Center for Claims Resolution's Chief Claims Officer, Rooney, forwarded to the plaintiffs' counsel changed the terms of the Master Settlement Agreement. It is well established that a written contract can be modified by an express mutual agreement, which may be in writing. Stanley's Cafeteria v. Abramson, 226 Va. 68, 72, 306 S.E.2d 870, 872 (1983). We have stated that "contracts between parties are subject to basic rules of interpretation. Contracts are construed as written, without adding terms that were not included by the parties." . . . Applying these contract principles, we are compelled to conclude, with positive assurance, that the plaintiffs' claims are not subject to the arbitration provision in the Master Settlement Agreement because a legally cognizable dispute does not exist. There is no dispute about the terms of the October 16, 2000 letter that modified the Master Settlement Agreement. There is no dispute that the language contained in the second paragraph of the October 2000 letter confers upon the plaintiffs the right to "pursue a remedy in contract against the [Center for Claims Resolution] members" for any deficiency in the event the Center for Claims Resolution fails to timely make any payments required by the Master Settlement Agreement. There is no dispute that the Center for Claims Resolution failed to pay the plaintiffs as required by the terms of the Master Settlement Agreement. Additionally, the October 2000 letter explicitly states that this "remedy in contract on the release will be the sole legal remedy of each plaintiff who has executed a release for the full consideration of his settlement but fails to receive timely payment in full." The defendants, however, assert that the plaintiffs' contractual remedies are limited to claims against the defaulting members of the Center for Claims Resolution and not "all the members of the Center for Claims Resolution." Thus, the defendants say that this difference in interpretation creates a dispute subject to resolution by an arbitrator pursuant to the terms of the arbitration provision in the Master Settlement Agreement. Contrary to the defendants' assertions, there can be no legally cognizable dispute regarding the meaning of the clear and unambiguous language contained in the October 2000 letter. As we have already stated, we must apply the plain meaning of the contract language in ascertaining the parties' rights, and pursuant to the plain meaning of the language used in the October 2000 modification, the plaintiffs have the right to "pursue

- 91 - a remedy in contract against the [Center for Claims Resolution] members for any deficiency." This clear and unambiguous language does not limit the plaintiffs' contract remedies to the defaulting Center for Claims Resolution members. We will not add words to the litigants' contract. Rather, we must enforce the contract using the express words that the Center for Claims Resolution chose to employ when making the written modification to the Master Settlement Agreement. As we have held: "It is the function of the court to construe the contract made by the parties, not to make a contract for them. The question for the court is what did the parties agree to as evidenced by their contract. The guiding light in the construction of a contract is the intention of the parties as expressed by them in the words they have used, and courts are bound to say that the parties intended what the written instrument plainly declares." Graphic Arts Mutual Ins. v. C.W. Warthen Co., 240 Va. 457, 460, 397 S.E.2d 876, 878 (1990). Moreover, a dispute that subjects a party to arbitration must be real and not imagined. A contrary conclusion would permit a litigant to assert the existence of a purported dispute when there is no basis in fact or law to do so, thereby depriving the opposing litigant of valuable contractual rights. Thus, reiterating, we hold that the circuit court did not err in denying the defendants' request to arbitrate because, applying the federal law and the Federal Arbitration Act, we conclude with positive assurance that no legally cognizable dispute exists that would subject the litigants to arbitration and, thus, there is nothing for an arbitrator to decide.

- 92 - Appeal of Arbitration-Related Orders

Pursuant to Code § 8.01-581.016, an appeal may be taken from: (1) an order denying an application to compel arbitration, (2) an order granting an application to stay arbitration, (3) an order confirming or denying an award, (4) an order modifying or correcting an award; (5) an order vacating an award without directing a rehearing; or (6) a judgment or decree entered pursuant to the provisions of the arbitration article. Thus, Code § 8.01-581.016 does not grant a right to appeal an order granting an application to compel arbitration. The Supreme Court of Virginia has recently held that the language of the statute is clear and unambiguous, and thus it is binding under the established doctrine that words may not be added to the statute that would expand its scope. Dicta to the contrary in Amchem Products as set forth above was flatly rejected in Seguin v. Northrop Grumman Sys. Corp., 277 Va. 244, 672 S.E.2d 877 (2009), a defamation action against the plaintiff's employer relating to a work performance evaluation. The circuit court’s order compelling arbitration pursuant to the provisions of the Virginia Uniform Arbitration Act was held not appealable under Code § 8.01- 581.016. Additionally, the order was not a final judgment order contemplated by Code § 8.01-670(A)(3) since the circuit court retains jurisdiction under Code § 8.01-581.010 to vacate an arbitration award and under Code § 8.01-581.011 to modify or correct an arbitration award. Since the order was not appealable there was no appellate jurisdiction to review the merits of plaintiff's contentions regarding the existence or enforceability of the arbitration agreement in question. Code § 8.01-670(A)(3) permits an appeal from “a final judgment in any other civil case,” but an order that compels arbitration pursuant to the Virginia Uniform Arbitration Act is not a final judgment order. Pursuant to Code § 8.01-581.010, the circuit court retains jurisdiction to vacate an arbitration award; pursuant to Code § 8.01- 581.011, the circuit court retains jurisdiction to modify or correct an arbitration award. For these reasons, a circuit court order that compels the parties to arbitrate their dispute is not an appealable order and there is no jurisdiction to review the merits of an appeal, including any contentions regarding the existence or enforceability of the arbitration agreement in question. See generally Seguin v. Northrop Grumman Sys. Corp., 277 Va. 244, 672 S.E.2d 877 (2009).

- 93 - F. Mediation Under the Virginia "Early Neutral Evaluation" System

Two decades ago the Legislature first enacted a set of inter-linked provisions greatly expanding the availability of alternative dispute resolution in Virginia, by authorizing any judge to refer any civil case to a local ADR program for an initial session. The court may send the case to a local mediation program or to one of a list of certified mediators, referred to as "neutrals" in some of the provisions. See Code §§ 8.01-576.4 to .12. The legislation was revamped significantly in 2002. Under the broad outlines of plan as enacted the judge may act sua sponte to refer cases to an ADR session, and presumably local standing orders to this effect are permissible. Parties are required to participate in an initial evaluation session, unless they affirmatively "opt out" of the process by filing a written statement which recites that the dispute resolution process has been explained to the party and that the party objects to the procedure. In that instance, the court "shall excuse" the party from attending, as provided in Code § 8.01-576.5. Only one session is mandatory for non-objecting litigants, and thereafter further sessions may be scheduled on consent if the parties and the neutral envision that they would be productive. The Virginia plan is a version of the "early neutral evaluations" programs several states have implemented in recent years. In Virginia the neutrals are to be trained and certified mediators. See Code § 8.01-576.8 (Judicial Council to provide guidelines for certification, and the court is to maintain lists of qualified mediators). The process as initially conceived was not to cost the parties anything, as provided in Code § 8.01- 576.7.

- 94 - Difficult issues of confidentiality may arise with respect to ADR programs involving cases presently or potentially to be litigated. Initial efforts to deal with these issues are collected in Code § 8.01-576.10, which attempts to protect work product disclosed in ADR proceedings, while allowing use of material that would be "otherwise subject to discovery". Given the limited disclosure regime in General District Court, and many problems of privilege and work product where barring use in court may not amount to full protection, it appears that there will be many questions arising in the future about these provisions. Overview of Current Versions. In its 2002 session, the General Assembly took several steps to beef up the use of mediation and other forms of alternative dispute resolution in Virginia. First, it amended the definition provisions in Code § 8.01-576.4 to label the initial mediation session an "orientation" as opposed to the former focus, which had called for an early evaluation of the case by a neutral. Code § 8.01-576.4. Similar amendments were made in §§ 8.01-576.5 and -576.6. This change clearly contemplates that multiple sessions of mediation may be needed in any given litigation. The provision relating to the cost of mediation was re- written, such that it now assures parties that the initial "orientation" session will be cost- free, but the Code also provides that – unless otherwise provided by law, the cost of any subsequent dispute resolution proceeding shall be met as agreed to by the parties and the neutral. Code § 8.01-576.7. The provision governing qualification of neutral persons who act as mediators and perform similar alternative dispute resolution roles is addressed in the Code, which provides in this regard that a neutral who provides dispute resolution services other than mediation pursuant to the Code provisions must provide the court with a written statement of qualifications, describing the neutral’s background and relevant training and experience in the field. A dispute resolution program may satisfy the requirements of this section on behalf of its neutrals by providing the court with a written statement of the background, training, experience, and certification, as appropriate, of any neutral

- 95 - who participates in its program. A neutral who desires to provide mediation and receive referrals from the court must be certified pursuant to guidelines promulgated by the Judicial Council of Virginia. The court maintains a list of mediators certified pursuant to guidelines promulgated by the Judicial Council and may maintain a list of neutrals and dispute resolution programs which have met the requirements of this section. The list will be divided among the areas of specialization or expertise of the neutrals. Code § 8.01-576.8. At the conclusion of the orientation session, or no later than ten days thereafter, parties electing to continue with the dispute resolution proceeding have options under the present Code provision. They may: (i) continue with the neutral who conducted the orientation session, (ii) select any neutral or dispute resolution program from the list maintained by the court to conduct such proceedings, or (iii) pursue any other alternative for voluntarily resolving the dispute to which the parties agree. If the parties choose to proceed with the dispute resolution proceeding but are unable to agree on a neutral or dispute resolution program during that period, the court will refer the case to a neutral or dispute resolution program who accepts such referrals, on the list maintained by the court on the basis of a fair and equitable rotation, taking into account the subject matter of the dispute and the expertise of the neutral, as appropriate. If one or more of the parties is indigent or no agreement as to payment is reached between the parties and a neutral, the court shall set a reasonable fee for the service of any neutral who accepts such referral pursuant to this paragraph. Code § 8.01-576.8. A neutral selected to conduct a dispute resolution proceeding under the existing Code provisions may encourage and assist the parties in reaching a resolution of their dispute, "but may not compel or coerce the parties into entering into a settlement agreement." Code §8.01-576.9. Thus the statute expressly requires that a neutral remain impartial and free from conflict of interests in each case, and that he or she decline to participate further in a case should such partiality or conflict arise. Id. Unless expressly authorized by the disclosing party, the neutral may not disclose to either party information relating to the subject matter of the dispute resolution proceeding provided to him in confidence by the other. In reporting on the outcome of the dispute resolution proceeding to the referring court, the neutral must indicate whether an agreement was reached, the terms of the agreement if authorized by the parties, the fact that no agreement was reached, or the fact that the orientation session or mediation did not occur. The neutral is forbidden by the statute to disclose information exchanged or observations regarding the conduct and demeanor of the parties and their counsel during the dispute resolution proceeding, unless the parties otherwise agree. Code §8.01-576.9. However, the Code now also provides that where the dispute involves the support of minor children of the parties, the parties shall disclose to each other and to the neutral the information to be used in completing the child support guidelines worksheet required by § 20-108.2. The guidelines computations and any reasons for deviation must be incorporated in any written agreement between the parties. Code §8.01-576.9. Immunity of the Mediator. The Code clearly provides that when mediation is provided by a mediator who is certified pursuant to guidelines promulgated by the Judicial Council of Virginia, the mediator, a mediation program for which the certified mediator is providing services, and a mediator co-mediating with a certified mediator

- 96 - shall all be immune from civil liability for, or resulting from, any act or omission done or made while engaged in efforts to assist or conduct a mediation, unless the act or omission was made or done in bad faith, with malicious intent or in a manner exhibiting a willful, wanton disregard of the rights, safety or property of another. Code §8.01- 576.9. Confidentiality of dispute resolution proceeding. The Code has made it clear that all memoranda, work products and other materials contained in the case files of a neutral or dispute resolution program are confidential. Any communication made in or in connection with the dispute resolution proceeding which relates to the controversy, including screening, intake and scheduling a dispute resolution proceeding, whether made to the neutral or dispute resolution program staff or to a party, or to any other person, is confidential. However, a written settlement agreement signed by the parties will not be confidential unless the parties otherwise agree in writing. Code § 8.01- 576.10. Under the revised Code provisions concerning alternative dispute resolution proceedings, confidential materials and communications are not subject to disclosure in discovery or in any judicial or administrative proceeding except (i) where all parties to the dispute resolution proceeding agree, in writing, to waive the confidentiality, (ii) in a subsequent action between the neutral or dispute resolution program and a party to the dispute resolution proceeding for damages arising out of the dispute resolution proceeding, (iii) statements, memoranda, materials and other tangible evidence, otherwise subject to discovery, which were not prepared specifically for use in and actually used in the dispute resolution proceeding, (iv) where a threat to inflict bodily injury is made, (v) where communications are intentionally used to plan, attempt to commit, or commit a crime or conceal an ongoing crime, (vi) where an ethics complaint is made against the neutral by a party to the dispute resolution proceeding to the extent necessary for the complainant to prove misconduct and the neutral to defend against such complaint, (vii) where communications are sought or offered to prove or disprove a claim or complaint of misconduct or malpractice filed against a party’s legal representative based on conduct occurring during a mediation, (viii) where communications are sought or offered to prove or disprove any of the grounds listed in § 8.01-576.12 in a proceeding to vacate a mediated agreement, or (ix) as provided by law or rule. Code § 8.01-576.10. The Code also provides that "use of attorney work product in a dispute resolution proceeding shall not result in a waiver of the attorney work product privilege." Code § 8.01-576.10. However, in any case where the dispute involves support of the minor children of the parties, financial information, including information contained in the child support guidelines worksheet, and written reasons for any deviation from the guidelines must be disclosed to each party and the court for the purpose of computing a basic child support amount pursuant to § 20-108.2. See Code § 8.01-576.10. The revised Code provisions recognize rare circumstances where orders or agreements might need to be vacated, due to fraud, duress or misconduct (including failings with respect to legal advice). Code § 8.01-576.12.

- 97 - Hypotheticals

1. O owned an antique desk valued at about $ 900 which needed refinishing. He took it to R for such work. R repaired the desk but then sold it to N, a neighbor. R disappears and N refuses to give up the desk. O wishes to sue N to get the desk back. How and where may O commence such a suit in detinue?

2. A brought suit against D in general district court and recovered a judgment for $865. D promptly appealed the case to the circuit court. During trial of the case in circuit court, A's counsel asks D, "Isn't it true that you were found liable in general district court on this issue?" D's counsel objects. How should the court rule?

3. On January 31 J obtained a judgment against L in general district court. The next day L filed an appeal to the circuit court. On March 15 L also provided the required bond and the required writ tax. J objects, claiming that the circuit court has no jurisdiction to hear the appeal. What result?

4. P was injured in a car accident with another car, driven by D. Both cars were seriously damaged. P sued D in general district court in Fauquier County, where the accident occurred. D filed a grounds of defense and a counterclaim for damages arising from the same incident. After a trial the judge of the general district court found that both drivers were negligent, and denied recovery to both. There was no appeal of the judgment. A few months later P sued D seeking $50,000 for personal injuries allegedly sustained in the collision. D files pleas of res judicata and collateral estoppel. How should the court rule?

5. J, a judge sitting in the General District Court, heard many unlawful detainer actions. He began a practice of conditioning the entry of orders in certain of these cases upon the return or limitation of attorneys fees collected by L, a landlord, under terms of the leases. L brings an application in the Circuit Court seeking a writ of prohibition to restrain J from routinely entering such orders in unlawful detainer actions. Should the Circuit Court grant the writ? If the Circuit Court denies the writ, could the Supreme Court of Virginia grant it on appeal?

- 98 - Chapter 3

Applicable Law & Equitable Principles

A. What Law Applies?...... 100 Buchanan v. Doe ...... 100 B. Claims in a "Newly Mixed" System ...... 105 The Single Form of Action – Effect of the Reform...... 106 Table of Civil Procedure Rules...... 107 Claims at Law or in Equity...... 111 Peculiarly Equitable Claims...... 112 Claims (almost always) At Law ...... 113 C. Equitable Relief ...... 114 Injunctions ...... 114 Specific performance ...... 115 Reformation ...... 115 Rescission…...... 115 Receivership ...... 115 Other Equitable Relief ...... 116 D. Equitable Defenses and Other Limits on Relief ...... 116 E. Statutes on The Applicable Law ...... 117 Code §1-10 The Common Law ...... 117 Code §1-11 Acts of Parliament...... 117 F. Case Law on Law & Equity Problems in Virginia ...... 117 Wright v. Castles ...... 117 NOTE: Res Judicata Preview...... 122 Shevel's, Inc. v. Southeastern Associates, Inc...... 123 NOTES on "Transfer" and Trial...... 125 Stanardsville Volunteer Fire Co. v. Berry...... 126 NOTES: Procedural Life after Stanardsville: Problems Solved?...... 133 G. Pleas and Advisory Juries ...... 136 Nelms v. Nelms...... 136 NOTES on Juries and Pleas...... 141 Review of Jury Verdicts on Equitable Issues ...... 142 Angstadt v. Atlantic Mutual Ins. Co...... 142 H. The Nature of Equity ...... 144 Tiller v. Owen...... 144 NOTES on Equitable Matters...... 146 I. Recommendations of a Commissioner ...... 148 Orgain v. Butler ...... 149 NOTES on Commissioners in Chancery...... 151 Study and Amendment on Use of Commissioners ...... 151 Rule 3:23 Commisioners in Chancery...... 155 J. Summary: 17 Propositions About Law & Equity in Virginia ...... 157 K. The Power of a Court Ruling on an Equitable Claim to Order All Necessary Relief...... 160 Advanced Marine Enterprises v. PRC Inc...... 160 Hypotheticals…… ...... 162

- 99 - A. What Law Applies?

BUCHANAN v. DOE 246 Va. 67, 431 S.E.2d 289 (1993)

JUSTICE WHITING delivered the opinion of the Court. This is an uninsured motorist case involving a issue, and we must decide whether our law or law controls. State Farm Mutual Automobile Insurance Company (State Farm) issued an automobile liability policy in Virginia to David B. Buchanan, a resident of Clifton Forge. The policy contained the following uninsured motorist (UM) provision mandated by former Code § 38.1-381, the predecessor of Code § 38.2-2206 (the Virginia UM statute): The company will pay in accordance with Section 38.1-381 of the Code of Virginia and all Acts amendatory thereof or supplementary thereto, all sums which the insured . . . shall be legally entitled to recover as damages from the owner or operator of an uninsured motor vehicle because of bodily injury sustained by the insured or property damage, caused by accident and arising out of the ownership, maintenance or use of such uninsured motor vehicle. The Virginia UM statute also provides that if the identity of the uninsured operator is unknown, he may be sued as "John Doe" and service of process may be made upon the insurance company "as though [it] were a party defendant." Code § 38.2-2206(E). Physical contact with the John Doe vehicle is not required to maintain this action under Buchanan's policy or Code § 38.2-2206. Buchanan was injured on June 9, 1989, when a truck forced his car off U.S. Route 220 in West Virginia. There was no contact between the vehicles. Although the truck driver stopped at the scene, he did not identify himself. The truck driver indicated to Buchanan that he would call the and an ambulance, but he did not return to the scene of the collision. Hence, Buchanan is unaware of the truck driver's identity. Pursuant to the provisions of his insurance policy and Code § 38.2-2206, Buchanan filed this action in the court below against the truck driver as "John Doe," seeking damages for his injuries and other losses. Following a stipulation by the parties and Buchanan's answer to State Farm's that reflected the facts recited above, State Farm filed a motion for summary judgment. In support of that motion, it relied upon a provision in the West Virginia UM statute that required proof of physical contact with the John Doe vehicle in a John Doe tort action and contended that this requirement was a part of the substantive tort law of West Virginia. Accordingly, State Farm contended, and the trial court agreed, that Buchanan could not recover from John Doe without proof of physical contact between his vehicle and John Doe's vehicle. Therefore, the court sustained State Farm's motion for summary judgment and entered a "Final Order of Dismissal." Buchanan appeals. The parties agree that under our conflict of law rules: (1) the law of the place of the wrong determines the substantive issues of tort liability, Jones v. R.S. Jones & Assocs.,

- 100 - 246 Va. 3, 431 S.E.2d 33 (1993) McMillan v. McMillan, 219 Va. 1127, 1128, 253 S.E.2d 662, 663 (1979) and (2) generally the law of the place where an insurance contract is written and delivered controls issues as to its coverage. Lackey v. Virginia Sur. Co., 209 Va. 713, 715, 167 S.E.2d 131, 133 (1969). The disagreement is whether the West Virginia proof-of-contact requirement is a matter of tort controlled by West Virginia law, or one of contract controlled by Virginia law. The forum state applies its own law to ascertain whether the issue is one of tort or contract. See Forsyth v. Cessna Aircraft Co., 520 F.2d 608, 611 (9th Cir. 1975) (law of forum applied to decide if case is one of contract or tort); Willard v. Aetna Cas. & Sur. Co. 213 Va. 481, 482-83, 193 S.E.2d 776, 778 (1973) (law of forum state where UM policy issued that permitted direct action against UM insurer held substantive, not procedural). And, in doing so, the forum state applies a principle described as an old technique which has recently acquired the new name of "depecage". This refers to the process whereby different issues in a single case arising out of a single set of facts may be decided according to the laws of different states. This has always been the process when procedural matters were held to be governed by forum law and substantive questions by some other law, even when matters characterized as procedural had substantial outcome-determinative effect. It has always been understood also that different substantive issues could properly be decided under the laws of different states, when the choice-influencing considerations differ as they apply to the different issues. The new development in this area is the currently increased discussion and analysis of the old technique. Robert A. Leflar, AMERICAN CONFLICTS LAW § 109, at 221-22 (3d ed. 1977) (emphasis added) (footnotes omitted). Thus, we apply the law of the Commonwealth to determine whether the West Virginia proof-of-contact requirement is a matter of tort or contract. And, we have defined a tort in the following language: The word "tort" has a settled meaning in Virginia. "A tort is any civil wrong or injury; a wrongful act (not involving a breach of contract) for which an action will lie." Jewett v. Ware, 107 Va. 802, 806, 60 S.E. 131, 132(1908) (internal quotation marks [and citation] omitted). "Tort" is also defined as the violation of some duty owing to the plaintiff imposed by general law or otherwise. Generally, the "duty must arise by operation of law and not by mere agreement of the parties." Black's Law Dictionary 1335 (5th ed. 1979). Stated differently, a "tort" is a "legal wrong committed upon the person or property independent of contract." Glisson v. Loxley, 235 Va. 62, 67, 366 S.E.2d 68, 71 (1988). On the other hand, a contract is defined as "[a]n agreement between two or more persons which creates an obligation to do or not to do a particular thing." Black's Law Dictionary 322 (6th ed. 1990). Although not expressed in a written contract, a statutory requirement affecting the performance of the contract becomes a part of its terms just as if it had been incorporated therein. Harbour Gate Owners' Ass'n v. Berg, 232 Va. 98, 105-106, 348 S.E.2d 252, 257 (1986). However, as noted, the proof-of-contact

- 101 - requirement is contained in the West Virginia UM statute, but not in the Virginia UM statute under which Buchanan's UM policy was issued. With these distinctions in mind, and applying Virginia law, we consider West Virginia's proof-of-contact provision. Substantive tort law in West Virginia, as in Virginia, requires that the plaintiff prove he was injured by the negligence of the defendant. But there is nothing in the tort law of either state which requires that injury be accompanied by physical contact in order to impose liability on the defendant. Under West Virginia law, however, in order to recover from an insurance company under an uninsured motorist policy, the injured party must prove in the John Doe tort action that the injury was accompanied by physical contact. But, for several reasons, we conclude that this requirement is a matter of dealing with insurance contracts. [Discussion of why this is so, is omitted] . . . .Reversed and remanded. JUSTICE LACY, CONCURRING. While conflict of laws principles may be articulated clearly and without ambiguity, this case demonstrates that the application of those principles is neither simple nor direct. There is no disagreement that Virginia law is applied to determine whether the issue is one of tort or of contract, and which substantive law applies in either instance. The majority and the dissent cite case law to support their respective views, reaching mutually exclusive outcomes that each maintains is the only outcome possible. This result underscores the difficulty of resolving conflict of laws issues and I cannot agree that based on a reading of the prior authority either result is so clearly apparent. The dissent finds that we are required to consider this solely as a tort action under Doe v. Brown, 203 Va. 508, 125 S.E.2d 159 (1962), disregarding the Court's recognition in Doe that certain statutory and policy conditions, including notice and proof of physical contact requirements, were requisites of coverage and that coverage issues were matters of contract. Id. at 515, 125 S.E.2d at 164-65. The majority, on the other hand, does not address the precedential value of the Doe decision when the Court makes its threshold determination whether the issue at hand is one of tort or contract. Citing Perkins v. Doe, 350 S.E.2d 711 (W.Va. 1986), the dissent asserts that West Virginia clearly considers the physical contact requirement to be an element of its substantive tort law in cases of this type. However, in 1988, the West Virginia Supreme Court found, in a choice of law situation analogous to the case before us, that the provision was contractual by nature. Lee v. Saliga, 373 S.E.2d 345, 348-49 (W.Va. 1988). In Lee a resident, injured in an automobile accident in West Virginia, brought a tort action against John Doe and others. Under West Virginia's question certification procedure, the Supreme Court considered whether the enforceability of the physical contact provision of West Virginia law should be "determined by the law of West Virginia, the situs of the accident, or of Pennsylvania, the situs of the insurance policy and the residence of the insured." Id. at 347. Recognizing that "uninsured motorist cases may raise questions of both tort and contract law," id. at 349, the West Virginia Court concluded that the contact requirement was governed by the law of the place of the insurance contract, a state which, like Virginia, did not require proof of physical contact to recover in a John Doe action. Id. at 350. The Court acknowledged the apparent inconsistency between Perkins and Lee, but noted that the only question

- 102 - certified to it in Perkins, was whether Virginia or West Virginia tort law applied. It stated that, in Perkins, it did not, as in Lee, decide whether tort or contract law applied. Id. at 349. Accordingly, that Court said that Perkins did not control the issues presented in Lee. Id. Review of Doe, Perkins, and Lee, along with the other cases cited by the majority and the dissent, does not, in my opinion, lead to the inevitable result asserted by either. I do, however, believe that an important policy consideration forms a more persuasive and conclusive basis for reaching the majority result. Even if, arguendo, this case involved only tort issues and West Virginia's substantive tort law (including the physical contact requirement) was applicable, Virginia conflict of law principles do not require that we necessarily apply the West Virginia provisions. "Comity does not require application of another state's substantive law if it is contrary to the public policy of the forum state." Willard v. Aetna Cas. & Sur. Co., 213 Va. 481, 483, 193 S.E.2d 776, 778 (1973). In my opinion, applying West Virginia law to bar a Virginia resident from establishing the negligence of a John Doe motorist and recovering under the uninsured motorist provisions of an automobile liability policy solely because there was no physical contact between the vehicles is contrary to a significant public policy of this Commonwealth, as reflected in a broad range of Virginia's motor vehicle statutes, rules and regulations. Those statutes include the General Assembly's enactment of the uninsured motorist insurance coverage provisions of the Code. Code § 38.2-2206. These provisions mandate policy coverage to protect non-negligent motorists injured by the acts of negligent, but uninsured, motorists. The General Assembly specifically has extended this protection to Virginia insureds who are injured by negligent unknown motorists. To restrict the Virginia insured's recovery against unknown motorists by imposing the physical contact rule punishes those drivers who attempt to avoid such contact, defeating the broader public policy to encourage safe driving. Applying the rule also places Virginia insureds at risk from negligent uninsured motorists whenever they leave the Commonwealth and subjects them to the requisites for recovery under the uninsured motorist provisions of each state in which they travel. Thus, they lose the full contractual benefits of their Virginia insurance policies, despite Virginia's articulated policy of protecting Virginia insureds against unknown, uninsured motorists whose negligence causes them injury. I note that, in light of those recognized policy interests, this Court repeatedly has found that the uninsured motorist provisions must be construed broadly to provide the remedy they were intended to provide. See, e.g., Nationwide Mut. Ins. Co. v. Sours, 205 Va. 602, 606, 139 S.E.2d 51, 54-55 (1964); State Farm Mut. Auto. Ins. Co. v. Brower, 204 Va. 887, 892, 134 S.E.2d 277, 281 (1964). Further, if the accident had occurred in Virginia, there would be no question of Buchanan's right to proceed to establish John Doe's liability for his injuries. Indeed, if Buchanan had filed suit in West Virginia, based on the facts before us here, the courts of that state would not have applied the physical contact rule to bar his action. To preclude his suit here based on an unfortunate combination of lex loci and , in light of the policies involved, is dictated neither by choice of law rules nor the principles of comity.

- 103 - Accordingly, I concur in the result reached by the majority and would reverse the decision of the lower court.

JUSTICE COMPTON, WITH WHOM JUSTICE STEPHENSON JOINS, DISSENTING. . . . . This appeal presents an uncomplicated issue. Upon a proper application of settled law, the judgment of the trial court should be affirmed. The case can be summarized very simply. This is a tort action seeking a money judgment based on negligence. Because the tort was committed outside Virginia, courts of the Commonwealth apply the traditional conflict of laws rule that the substantive tort law of the place of the wrong governs the Virginia action. The substantive West Virginia tort law required a plaintiff to prove physical contact between a John Doe vehicle and the vehicle or person of the plaintiff. Because the alleged tort involved no physical contact and because the applicable West Virginia substantive tort law precluded recovery against a John Doe defendant absent a showing of physical contact, the trial court correctly ruled that no material fact was genuinely in dispute, Rule 3:18, and that defendant was entitled to summary judgment. . . .

- 104 - B. Claims in a "Newly Mixed" System

One of the most important features of the Virginia legal system is the relationship of law and equity. From the founding of the first colonial settlement in Virginia, until January 1, 2006, there has been one cadre of full jurisdiction trial judge in Virginia, but two "sides" to the court. Legal actions and equitable suits were maintained on separate dockets, and there were parallel but separate sets of rules covering procedure on the two sides: Part Two dealt with procedure in equity and Part Three dealt with actions at law. Several aspects of the rules and statutes apply in both sorts of suits. The distinction between legal and equitable actions meant quite a bit more in Virginia than the fact that the papers are filed on separate shelves in the clerks' offices, though it meant that too. Not all distinctions between law and equity have been mooted by the January 1, 2006 reforms. However, after a decade of Bar committee study, articles planted in law journals and Bar news publications, public forums and debates, judicial consideration and legislative nurturing, the Supreme Court in 2004 approved a draft set of Rules of Court to call for a “single form of civil action” in Virginia. In 2005 the General Assembly passed an omnibus enabling statute, amending 30 different sections of the Code of Virginia to permit the Supreme Court’s Rule changes to go into effect. Once the legislature acted in the Spring of 2005, the Supreme Court revised and officially promulgated a new “Part Three” of the Rules of Court, effective on the same day as the enabling legislation, January 1, 2006. The new single set of rules replaces the former separate “parts” of the Rules (Two and Three) which had governed equity proceedings (Part Two) and proceedings on legal claims (Part Three) for decades. In- service “continuing education” courses were held on the new Rules, more articles appeared in bar publications and the Virginia Lawyers Weekly, and the new Rules became effective. For law students new to Virginia practice this may seem like a non-event. After all, the effect is to make the nomenclature of civil litigation in Virginia very much like federal and other state systems, with a complaint and answer being the basic pleadings. It makes the procedure for all civil cases uniform.

- 105 - These may seem like basic, logical outcomes. However, proposals along these lines were defeated in the 1890's, and at various points in the 1900's. There are a number of doctrines in Virginia law, both substantive and procedural, which underlay the distinction, and not all of these principles are abrogated by the adoption of a straightforward and unified system of civil pleading and practice. Because these changes are recent, the cases in these readings use old terminology, and refer to distinctions in the procedures that will not apply today. In each chapter, unnecessary excursions into prior law have been omitted. Those “holdovers” from earlier eras that remain, frame issues that will be in the forefront of litigation practice as today’s law students become tomorrow’s Virginia lawyers. Hence some appreciation for the prior difficulties in Virginia practice is necessary to understand the operation of the current system.

The Single Form of Action – Effect of the Reform The 2006 reforms mean, in effect, that there is now only one "side of court" in the Virginia system. Equitable claims can be pursued there when the required elements are present, and legal claims can be pursued when the established legal requirements are present. The trial court will accord a jury for legal claims, and hear equitable claims as at present. In essence, the procedure will not differ markedly from present procedure on one side of court or the other, but the parties will always be in the correct forum. The "single form of civil action" system will permit a trial judge to follow equitable doctrines for claims and defenses of that nature, and accord jury trial rights and monetary relief for claims at law, without requiring the parties to file multiple suits, transfer (sometimes improvidently) from side to side, or to seek a stay of one court's actions to pursue the other exclusively. A broader, and simpler, range of case management tools are thus be provided to the trial court, allowing it to reduce delays without cutting off any party's procedural rights and options. It is contemplated that under this limited form of unification of procedure will not be any increase in filing, microfilming and related expenses of court administration through the maintenance of a single docket. As of 2005, parts Two and Three of the rules were largely congruent already, and very few changes were required to coordinate these two portions of the rules into a single body of rules. This simplification is aided by the fact that the general principles of Part One of the rules already apply to both legal and equitable claims, and the discovery provisions in Part Four of the rules also apply in both forms of action. It bears noting that while the new system creates a single procedure system for civil cases in the Commonwealth, it preserves in all respects the distinctions between law and equity, concerning the substance of equitable claims and defenses, rights of action, limitations principles, and the powers and limits on the courts in entertaining such actions.

- 106 - Table of Civil Procedure Rules The new Part Three rules effective in 2006 are organized as follows:

Practice and Procedure in Civil Actions Rule 3:1 Scope Rule 3:2 Commencement of Civil Actions Rule 3:3 Filing of Pleadings, Return of Certain Writs Rule 3:4 Copies of Complaint Rule 3:5 The Summons Rule 3:6 Proof of Service Rule 3:7 Bills of Particulars Rule 3:8 Answers, Pleas, Demurrers and Motions Rule 3:9 Counterclaims Rule 3:10 Cross-Claims Rule 3:11 Rule 3:12 Joinder of Additional Parties Rule 3:13 Third-Party Practice Rule 3:14 Intervention Rule 3:15 Statutory Interpleader Rule 3:16 New Parties Rule 3:17 Substitution of Parties Rule 3:18 General Provisions as to Pleadings Rule 3:19 Default Rule 3:20 Summary Judgment Rule 3:21 Jury Trial of Right Rule 3:22 Trial by Jury or by the Court Rule 3:23 Proceedings Before a Commissioner in Chancery

Under the new procedures, all actions, whether based in law or in equity, are assigned to a unified civil docket governed by the Rules. Enabling statutes passed by the General Assembly in 2005 contemplate that the clerks of court will maintain only one civil docket book, and only one order book, obliterating the prior distinctions in the records. As a result, due to the adoption of a single set of procedures for all civil cases, purely procedural impediments to the presentation of any issue by any party, based on the difference between law and equity, were destroyed. Indeed, in many cases, it will not even be necessary to determine whether a claim is legal or equitable.

- 107 - By requiring a single form of action, new Part Three of the Virginia Rules eliminates most procedural distinctions based on whether a plaintiff's claims are legal or equitable or both. An action is not an equitable action or a legal action, but simply a civil action governed by the same procedural rules. Under the 2006 reforms, courts should allow the distinction between law and equity to have procedural significance only if there is a clear and rational justification for doing so. The distinction between law and equity will continue to be relevant in determining whether a party is entitled to a jury trial because the Constitutional right to a trial by jury is protected only for legal issues. Substantive Differences Between Law and Equity Remain. While the unified procedure for law and equity claims is intended to remove procedural barriers to the presentation of any issue, substantive distinctions between law and equity generally remain. Because the unified practice of the Rules does not affect substantive law, the statute of limitations applicable to a particular claim is not generally affected by the unifications of law and equity actions. As a result, determination of the applicable statute of limitations under Virginia law depends on the nature of the complaint asserted. Pleading Proper Form of Action and Demanding Proper Relief. In addition to eliminating most procedural distinctions between law and equity, new Part Three of the Rules of Court enables the court to grant full relief among the parties, without regard to whether the complaint accurately describes the legal theory that is the basis for relief or even properly demands the relief to which plaintiff establishes an entitlement. Virginia is a "notice pleading" state, and pleadings are interpreted based on the facts alleged and remedy sought, not the ''form of action'' asserted by the pleader. Thus, the court will determine the true nature of a claim, such as whether a claim is in contract or in tort, in law or in equity, or corresponding to some specific common-law form of action (e.g., covenant, trespass, detinue, etc.) from the facts alleged, rather than from the legal theory posited. Part Three as amended in 2006 does not displace substantive rules that may depend on the nature of a claim. It merely provides that the nature of the action does not depend on the form of action or legal theory designated by the pleader. Actions May Involve Legal and Equitable Claims. Using a single form of action for all actions within the scope of the Rules allows legal and equitable claims to be combined in a single action. Because all claims are brought in a civil action, they may each be brought in the same civil action. There is no need, for example, to bring legal claims in a legal action and equitable claims in an equitable suit. The claims, once joined, may also be tried together. The unification of law and equity procedure promotes the efficient resolution of disputes. Adequate Remedy at Law No Basis for Dismissal. In all other American jurisdictions where law and equity claims may be brought in one proceeding – which is essentially every state and the federal courts – it is not generally a ground for dismissal of a complaint asserting equitable claims that the plaintiff has an adequate remedy at law. Traditionally, a court of equity lacked jurisdiction over a complaint unless no adequate legal relief was available to plaintiff, and a court of equity was required to dismiss a suit if the plaintiff had an adequate legal remedy. The unification of civil procedure in Virginia under the 2006 Rules allows a court to exercise both legal and

- 108 - equitable jurisdiction concurrently. As a result, the court's jurisdiction over an equitable claim does not generally depend on the lack of an adequate legal remedy unless the court lacks subject-matter jurisdiction over the legal claim. Of course, the standards for equitable relief will still be applied. Thus, for example, while a complaint may seek both legal and equitable relief, a court may not grant equitable relief unless it first determines that the party seeking equitable relief has no adequate legal remedy. Because a court has jurisdiction to adjudicate both legal and equitable issues, it is not necessary to force a party to elect among different forms of claim until the status of the litigation requires an election. The creation of a single form of procedure for law and equity claims allows the court to resolve claims that have both legal and equitable aspects and to preserve the right to trial by jury on the legal aspects of the claim. Prior to the current revolution, a court of equity had the power to adjudicate claims with legal aspects on the grounds that a court of equity was required to provide full relief between the parties and that it could not do so without resolving legal issues. The right to trial by jury on such claims, however, was generally lost. For a discussion of the factors to consider in determining whether claims are at law or in equity – still relevant from 2006 onward in determining filing fees and jury trial rights – see Kent Sinclair, Guide to Virginia Law & Equity Reform and Other Landmark Changes, Ch. 1 (2006) Forms of Equitable Relief Now Available in All Actions. As in most jurisdictions, equitable relief is normally only available if the remedies at law in the context are inadequate, equitable relief itself is manageable, and there are no equitable defenses barring relief. Inadequate remedy at law is shown by the need for injunctive relief, specific performance or other uniquely equitable relief, noted below. The inadequacy of damages may be demonstrated by the difficulty of fixing an award without speculating, or by the insolvency of the defendant for any award. If the defendant's conduct is repetitive, damages alone may not be sufficient. The traditional "irreparable harm" generally means damages for which an award in dollars will not fairly recompense the plaintiff. The practicality of equitable relief will be a necessary consideration. Protection of property interests is considered well within equity's powers, but the court is more reluctant to act when constitutional rights or other less concrete issues are at stake since compliance with the court's directions is more difficult to measure, and long-term supervision of an ongoing relationship is not desired. These traditional limitations still apply in American jurisdictions after the "merger" of law and equity in the various States and in the federal courts. The reason has to do with a preference for the fungible relief afforded by dollar damages, and the presumption that most of life's injuries can be redressed by a dollar damage award. Thus in every state, and still in Virginia under the 2006 reform in the forms of pleading and practice, obtaining equitable relief will require a showing that the special intrusiveness and supervision of equitable relief is necessary because the normal dollar damage award system fails to provide the plaintiff with full redress, or full protection.

- 109 - Jury Trial in The Era of Mixed Law and Equity Cases. Prior to 2006, one watershed distinction between the two "sides" of court was the routine availability of a jury trial in "law" cases and the normal absence of a jury in "equity" cases. The single- form-of-action reform implemented in 2006 does not create jury trial rights where they did not formerly exist, but the procedure for denoting when a jury is sought and afforded will be quite different under the modern revision of Part Three of the Rules. For claims that are in traditional legal remedy categories, a jury trial is available as a matter of right upon the request of either party. In equity, the tradition is the opposite for there were almost no jury before the chancellor at common law. Despite the provision for a single form of action, some procedural rules still depend on the substantive nature of the case. Most significantly, the provision for one form of action does not alter a party's right to a trial by jury. Indeed, Rule 3:21 (''Jury Trial of Right'') expressly preserves the right to jury trial to the extent granted by the Constitution or by statute. The Virginia Constitution in Article I, section 11 guarantees the right to a trial by jury. However, because this protection extends to suits at common law, but not in equity, the form of an action is generally dispositive of whether the parties may claim a right to trial by jury. The right to trial by jury exists for legal issues, but not for equitable or admiralty issues. See generally Chapter 8 of Kent Sinclair, Guide to Virginia Law & Equity Reform and Other Landmark Changes (2006) or a discussion of numerous issues with respect to implementing the continued and pre- existing jury trial rights in "mixed" cases containing both legal and equitable causes of action in a single proceeding. Advisory Juries on Equitable Claims. In Virginia, general equitable claims are heard without a jury. However, the chancellor has had a statutory power to empanel an advisory jury, whose verdict is not binding but simply "informs the " of the presiding judge. This procedure, known previously as "an issue out of chancery," has been continued and re-named for 2006 and beyond as the "advisory jury" process, and is controlled under exactly the same statute and tests as under prior law. "Pleas In Equity" Survive. Even under the reforms of 2006 creating a single form of action, defendant may still raise a special plea, setting forth a single issue of fact likely to be determinative of the parties' rights in the suit. Thus where a defendant raises a single, dispositive claim of fact which, if proven, would defeat the plaintiff's case, there is a right to a jury determination on that claim (known as a "plea in equity"). The common issues on which a plea in equity may be presented, by stating a single state of facts that would provide a total defense to an action, are: release, statute of limitations, lack of jurisdiction, usury, infancy, and bankruptcy. In partnership actions, denial of the partner relation states a plea. A defendant's plea that he is a bona fide purchaser for value will state a plea in actions to recover property. A mere denial of plaintiff's averments in the complaint is not a special plea.7 And, as the decision in Stanardsville Volunteer Fire Company indicates, where a "special plea in equity" is raised and disputed, either party may demand a jury trial. The jury's verdict in that instance is binding on the chancellor, unlike the effect of issues simply referred to an advisory jury by the court of in a trial of an equitable claim for which no jury trial right exists.8

7 See Bolling v. General Motors Acceptance Corporation, 204 Va. 4, 129 S.E.2d 54 (1963). 8 See Code § 8.01-336.

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Claims at Law or in Equity Litigant's Choice. There are many contexts in which the litigant may choose whether to pursue a cause of action that was historically one “at law” or one that, traditionally, was heard by the courts in equity. Some common considerations are listed in this section and the succeeding one. Similarly, the choice of remedies may necessitate the choice of the equitable forum. See sections B and C, below, for an overview of these matters as well. Application of these concepts in 2006 and beyond will prove interesting. A brief survey of the most common kinds of actions heard in equity will demonstrate that they are also common actions at law. The decision-making criterion heretofore has been whether the plaintiff needed "something more" than dollar damages. „ Breach of contract. The action may be brought at law for damages, or in equity if specific performance is sought. Equity may also award "partial specific performance" and damages for the diminished value of the performance or the portions of the contractual obligations not capable of performance. If a party requires injunctive relief in a contractual setting (e.g., to enforce a covenant not to compete in a particular market area) or reformation of a contract to reflect the actual agreement of the parties, the suit should be brought on the equitable side of court. Also, if any of the equitable forms of relief noted below are sought (e.g., appointment of a receiver, specific performance, , rescission) the suit should be brought in equity. Prior to 2006 this often meant that if a plaintiff needed equitable relief in addition to dollar damages, any right to a jury might need to be waived so that plaintiff could proceed in a single “side” of court and obtain relief from “the chancellor” (the judge sitting in an equity case), a proceeding where no jury trial is generally provided. Today, a contract case will be a civil action commenced by a complaint. Separate counts can be used to assert the right to different forms of relief arising from the contractual arrangements. „ Malicious prosecution. This action normally was traditionally brought at law, but repeated filings of suits to harass a person may warrant proceeding in equity to obtain injunctive relief. „ Trespass to Land. Damages may suffice at law, but repeated or continuous violations, or irreparable injury (damage to irreplaceable property, or any damage by an insolvent trespasser) may warrant injunctive relief. „ Unfair competition, Trade Secret violations, Business torts. Actions lie at law for these torts where the conduct is completed, but where injunctive relief is needed (as is common) to prevent continued harms, prior to January 1, 2006 these actions needed to be brought in equity. Under the single-form-of-action reform in 2006, all manner of relief will be available in a single suit.

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Peculiarly Equitable Claims There are some causes of action that historically were brought only on the equitable “side” of the circuit court.. ‡ Creditors' Bills. A creditors suit is available to reach a debtor's property for execution of a . Lien creditors and judgment creditors may bring the action where enforcement of the obligation at law is problematic. "General creditors" may not bring such a claim unless there is fraud, abusive property transfer to avoid payment, or like conduct. ‡ Actions for Divorce or Annulment. These common domestic relations proceedings constitute the single largest subject area of equity claims in the Virginia circuit courts. ‡ Actions for Partition of Real Property. Partition is the remedy given when two or more persons jointly own property and disagree about what should be done with it. Applying a "best interests of the owners" standard, the court will try to determine whether it should be divided, whether division "in kind" is possible (separate lots) and if not, whether sale and division of the proceeds is the best path. ‡ Actions for Restitution. Restitution is an equitable body of principles which provides a cause of action in equity for "". The plaintiff may obtain restitutionary relief upon a showing that a benefit was conferred upon defendant by the plaintiff, which was requested (or the equivalent; at least, plaintiff did not contribute the benefit as a mere gift), and plaintiff reasonably expected recompense. Relief in restitution may take the form of a constructive trust tracing the proceeds or value conferred. An "equitable lien" may be impressed upon the property (in Virginia, an equitable lien is like a mortgage, and in respect of real property it is only recognized if there is a writing identifying the real property to be burdened and specifically indicating that a lien on the property is intended; equitable liens on personalty may not require this degree of documentation). Restitution may require an accounting, to determine the actual amount of recovery which is appropriate in the circumstances. And it may necessitate an order of subrogation where rights against third-parties are involved. In actions involving chattels or other unique property, "specific restitution" of the property may be ordered, in a sort of equitable replevin. Starting in 2006, these proceedings are simply civil actions in circuit court. They retain their former equitable heritage in that there was no jury trial right historically accorded to these sorts of actions, and none will be available under the single-form-of- pleading system now in effect.

- 112 - Claims (almost always) At Law Most actions were traditionally treated as matters to be heard “at law,” deriving from traditionally recognized causes of action for which the principal legal remedy of damages is suitable. Perhaps the most common action regularly brought only on the law side of the court is negligence, whether in the traditional personal injury context or not. Most other torts were mainly brought on the law side, but on occasion the intentionality of the conduct, its repetitiveness or other exacerbating factors leads a party to invoke equity in order to obtain injunctive or specific relief. The legislature on occasion allocated various statutory causes of action to one side of the court or the other.

- 113 - C. Equitable Relief

As in most jurisdictions, equitable relief is normally only available if the remedies at law in the context are inadequate, equitable relief itself is manageable, and there are no equitable defenses barring relief. Inadequate remedy at law is shown by the need for injunctive relief, specific performance or other uniquely equitable relief, noted below. The inadequacy of damages may be demonstrated by the difficulty of fixing an award without speculating, or by the insolvency of the defendant for any award. If the defendant's conduct is repetitive, damages alone may not be sufficient. The traditional "irreparable harm" generally means damages for which an award in dollars will not fairly recompense the plaintiff. The practicality of equitable relief will be a necessary consideration. Protection of property interests is considered well within equity's powers, but the court is more reluctant to act when constitutional rights or other less concrete issues are at stake since compliance with the court's directions is more difficult to measure, and long-term supervision of an ongoing relationship is not desired. These traditional limitations still apply in American jurisdictions after the “merger” of law and equity in the various States and in the federal courts. The reason has to do with a preference for the fungible relief afforded by dollar damages, and the presumption that most of life’s injuries can be redressed by a dollar damage award. Thus in every state, and still in Virginia under the 2006 reform in the forms of pleading and practice, obtaining equitable relief will require a showing that the special intrusiveness and supervision of equitable relief is necessary because the normal dollar damage award system fails to provide the plaintiff with full redress, or full protection.

Injunctions In general, to warrant issuance of an injunction a party must show that there is a legally recognized right that the person against whom the injunction will run is infringing, or is about to infringe, that there is no adequate remedy at law for this action, that the injunction would be an effective and enforceable means of redressing the problem, and that the balance of hardships favors the party seeking the injunction. Even when these elements are shown, however, an injunction will not issue if there are equitable defenses demonstrated by the opponent of this relief. In considering preliminary or temporary injunctive relief during suit the court will evaluate the risk of irreparable injury to the party seeking relief and the likelihood that the party seeking relief will ultimately prevail on the merits. There are occasionally restraining orders entered and the category of temporary or preliminary injunction is well recognized. The applicant must demonstrate irreparable harm to himself, and the court will consider whether granting the injunction even temporarily will visit irreparable damage on the restrained party. Upon the presentation of evidence (depositions or proof ore tenus), on notice, a permanent injunction may be granted. A security bond may be required.

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Specific performance In any contractual relationship, the court applying equitable principles may grant specific performance if these elements are met z there is a valid contract between the parties, that is itself not inequitable [Note that plaintiff must plead and prove existence and fairness of the agreement]. z there is no adequate remedy at law for the breach z specific performance is a practical form of relief in the circumstances z there are mutual performance obligations, such that each party may comply with obligations under the contract z there are no legal or equitable defenses to enforcement of the agreement. The court may also grant partial specific performance, enforcing so much of the obligations as is practical, and awarding damages for the shortfall between obligation and performance.

Reformation Reformation of an agreement or other document is a judicial re-writing of the instrument. It requires showings that originally the parties had an oral or written agreement and that the instrument to be reformed was later created, and that the instrument to be reformed fails to reflect the antecedent agreement owing either to fraud or mutual mistake. Since this remedy drastically interferes with a facially binding document, proof by clear and convincing evidence is required to satisfy these requirements for relief.

Rescission Rescission is the undoing of a transaction, abrogating the contractual or property event entirely. Technically, a party may simply declare rescission. If a party seeks to have the court in equity made the determination, an action for "cancellation" of the arrangement may be brought. In either event, the grounds for rescinding a transaction are: fraud, innocent misrepresentation of very material facts coupled with inequitable conduct, mutual mistake, or unilateral mistake of one party known (or suspected) by the other party.

Receivership Finally, the court exercising equitable powers may appoint a receiver to manage property where it is shown that the plaintiff will be damaged if the property is left in the control of the defendant, and plaintiff has an interest in the property (as opposed to a purely personal claim against the defendant that plaintiff simply wishes to enforce against the property).

- 115 - Other Equitable Relief As indicated in the preceding sections, other forms of relief may also bring the claim within the ambit of equity. Some of the other forms of relief seen with some frequency in the courts are actions in which a party seeks to have the court impose a constructive trust on funds, personalty or realty in the possession or control of another, actions seeking an accounting of funds among those with a partnership or other fiduciary relation inter se, or actions in which part of the relief would be an equitable lien on personalty or real property. Often these actions are a form of restitutionary relief, and may be sought along with purely restitutionary remedies, including specific restitution of an item of personalty.

D. Equitable Defenses and Other Limits on Relief

Special defenses apply in response to equitable claims, principal among them being the doctrines of laches and "unclean hands." By statute these defenses may also be raised in any action on a contract. See also Rule Rule 1:4(k), seeming to permit equitable defenses to be asserted in actions on legal claims. Laches is a limitations notion barring prosecution of an equitable claim after an unconscionable amount of time has passed, at least where the defendant has been prejudiced by the delay in assertion of plaintiff's rights. The matter is treated at the end of Chapter 16 of these materials, in section 16-P. Unclean hands is a doctrine denying relief to a plaintiff who has been guilty of inequitable conduct, and hence is one who should not benefit from the conscience-based relief of a court of equity. Unclean hands may be shown in a limitless variety of ways. Common examples of conduct deemed to present the defense would be: fraud, unethical or "sharp" practices, duress, undue influence, unconscionability and gross inadequacy of consideration. In general, the conduct asserted to show unclean hands must be related to the conduct, transactions or occurrences in suit in order to present a defense. Equitable estoppel (or estoppel in pais) may also be viewed as a defense to an equitable claim. The doctrine finds an estoppel where a person has reasonably relied on a statement or conduct relating to present or past events (not speculation about the future), which was intended to be relied on, and which resulted in a detrimental change of position by the relying party. Other Limits on Equitable Relief. Generally a court entertaining an equitable claim will not undertake to manage the parties' affairs far into the future, or compel the rendition of future personal services. Where criminal conduct of the defendant may be involved, or rights of free expression, the court in equity will rarely act. Another traditional limit on equitable relief was a barrier to actions in rem. Today, however, a court sitting in equity may rule on claims affecting property, such as adverse possession actions, foreclosure of liens or mortgages, and partition of real estate. Title to personal property and attachments may also be heard. Aspects of divorce are heard in equity.

- 116 - E. Statutes on The Applicable Law

Some of the statutes bearing on the applicable aw and equity issues in Virginia are the following: §1-200 The Common Law. The common law of England, insofar as it is not repugnant to the principles of the Bill of Rights and Constitution of this Commonwealth, shall continue in full force within the same, and be the rule of decision, except as altered by the General Assembly.

§1-201 Acts of Parliament. The right and benefit of all writs, remedial and judicial, given by any statute or , made in aid of the common law prior to the fourth year of the reign of James the First, of a general nature, not local to England, shall still be saved, insofar as the same are consistent with the Bill of Rights and Constitution of this Commonwealth and the Acts of Assembly.

F. Case Law on Law & Equity Problems in Virginia

WRIGHT v. CASTLES 232 Va. 218, 349 S.E.2d 125 (1986)

JUSTICE STEPHENSON delivered the opinion of the Court. This appeal involves the res judicata effect of a chancery cause for injunctive relief on a subsequent action at law for compensatory and punitive damages. The same events gave rise to both proceedings. The present case is an action at law brought in 1982 by Richard B. Wright, Jr., owner of Clare Mont Farm, against John G. and Dorothy T. Castles (collectively, Castles), owners of Santee Farm, a property adjoining Clare Mont Farm. In his motion for judgment, Wright alleged first that Castles falsely and maliciously slandered his title on several occasions by interfering with the use of Santee Park Road, a right of way across Santee Farm to Clare Mont Farm. Wright next alleged that Castles wrongfully and tortiously interfered with the consummation of a contract by telling a potential buyer of Clare Mont Farm the right of way could not be used for heavy hauling such as fuel trucks. Finally, Wright requested $58,950 in compensatory damages and $500,000 in punitive damages. Castles filed a plea of res judicata based on a prior equity proceeding. The trial court sustained the plea and dismissed the action for damages with prejudice.

- 117 - In the previous chancery cause, Wright sought to enjoin John G. Castles from interfering with Wright's use of the road. Castles had erected a large sign at the entrance of the right of way stating that heavy hauling was prohibited over Santee Park Road. Wright's bill of complaint asserted a right to injunctive relief based on the equitable doctrines of estoppel, waiver, and laches. In his bill, Wright also prayed for "such other and further relief in the premises as the nature of the case may require or to equity may seem meet." The bill contained no prayer for an assessment of damages. Evidence in the chancery cause was heard ore tenus. The evidence showed that the original to the predecessor in title of both Wright and Castles created two rights of way through Santee Farm to Clare Mont Farm, one of which was Santee Park Road. The original conveyance also contained a restrictive covenant prohibiting heavy hauling over Santee Park Road. However, when Wright bought Clare Mont Farm in early 1963, Santee Park Road was the only usable ingress to and egress from Clare Mont Farm. Immediately after Wright bought the property, Castles advised him that previous Clare Mont Farm owners had used Santee Park Road for heavy hauling in violation of the restrictive covenant, and Castles had not complained. However, Castles said he now wished to reach an agreement with Wright concerning the road's use and maintenance. Although the parties made no agreement, Wright continued to use the road for all purposes with no complaint from Castles until 1978. The evidence showed that Castles first erected the sign in 1978 after Wright moved from Clare Mont Farm and listed the property for sale. During the winter of 1978-79, Castles prevented a fuel truck from delivering heating fuel to the Clare Mont Farm residence, causing pipes to freeze and burst. In June 1979, Castles blocked the path of a tenant's moving truck with an automobile. One potential buyer testified he withdrew his offer to purchase Clare Mont Farm because of the sign. A real estate agent testified that the sign frightened potential buyers, and as a result, Wright had reduced the price of the property from $379,500 to $325,000. At the conclusion of Wright's case, Castles made a motion to strike evidence relating to financial loss, which the court sustained after the following colloquy: [Counsel for Wright]: Of course, we pray that the temporary injunction be made a permanent injunction to the complainant on the Santee Park Road for all purposes, including heavy hauling, and that is all. The Court: All right, sir, you are not requesting any financial loss in this? [Counsel for Wright]: Not in this case, Your Honor. The Court: I will sustain the motion.

- 118 - Subsequently, the parties compromised the chancery suit, and the court entered a final consent decree on August 26, 1981, permanently enjoining Castles from interfering with Wright's residential, agricultural, and equestrian use of the Santee Park Road right of way. At the outset, we reject Castles' contention that the prayer for general relief in Wright's bill of complaint was sufficient to include the allegations and claims set forth in Wright's motion for judgment. Under a prayer for general relief, a court may grant only relief that is germane to the subject matter of the specific relief sought and when the plaintiff asserts some right arising from the specific allegation made. See Layton v. Seawall Enterprises, Inc., 231 Va. 402, 406, 344 S.E.2d 896, 899 (1986). Castles also contends that when a plaintiff initiates an equity suit, he must seek in that proceeding all monetary damages to which he may be entitled. If the plaintiff fails to do so, Castles argues, he is precluded by res judicata from maintaining an action at law to recover such damages. Citing foreign authority, Castles appears to invite us to abrogate thong-standing distinction between law and chancery and adopt a "unified system." We decline the invitation. The marked distinction between law and chancery, a product of the English legal system, continues to exist in the Commonwealth. When a party seeks monetary damages caused by another's tortious conduct, he must bring his action on the law side of the court, and either party has a right to a jury trial. See Stanardsville Vol. Fire Co. v. Berry, 229 Va. 578, 583, 331 S.E.2d 466, 469- 70 (1985); O'Brien v. Snow, 215 Va. 403, 405, 210 S.E.2d 165, 167 (1974). On the other hand, when a party seeks injunctive relief, he must sue in equity. In equity, a litigant has no constitutional right to trial by jury, Forbes & Co. v. So. Cotton Oil Co., 130 Va. 245, 263-64, 108 S.E. 15, 21 (1921), and, absent a plea in equity, see Code § 8.01-336(D), no statutory right. Moreover, a chancery suit is not res judicata to a subsequent law action unless the very matter in controversy in the pending action was decided in the prior suit. Pleasants v. Clements, 29 Va. (2 Leigh) 474 (1831) (a chancery proceeding to rescind a contract does not bar a subsequent law action to recover damages for breach of warranty on the same contract). For res judicata purposes, four elements must concur: (1) identity of the remedies sought; (2) identity of the cause of action; (3) identity of the parties; and (4) identity of the quality of the persons for or against whom the claim is made. Mowry v. City of Virginia Beach, 198 Va. 205, 211, 93 S.E.2d 323, 327 (1956). Castles, however, contends that in Patterson v. Saunders, 194 Va. 607, 74 S.E.2d 204 (1953), we "held that a decree refusing an injunction against cutting timber was res judicata of a subsequent damage action for cutting the same timber." Castles suggests that Patterson supports his contention that Wright was required to prosecute his injunction suit and his damage claim in the same proceeding. We view Patterson differently. The plaintiff in Patterson brought a law action to recover monetary damages for timber the defendant had cut from land allegedly owned by the plaintiff. The defendant filed a plea of res judicata based on a prior equity proceeding in which the plaintiff had sought to enjoin the defendant from cutting the same timber from the same land. The chancellor had denied the injunction because the plaintiff failed to prove his title to the land.

- 119 - In the Patterson law action, whether the plaintiff owned the land was essential to determining whether he was entitled to damages. Because the issue of the plaintiff's title had been fully litigated and resolved against him in the equity proceeding, we held that the plaintiff was precluded from maintaining an action at law for damages for the cut timber. Id. at 612, 74 S.E.2d at 208. Thus, Patterson actually rests upon the doctrine of collateral estoppel, not res judicata (res judicata was a misnomer). Neither Patterson nor the doctrine of collateral estoppel has any bearing on the present appeal. Castles finally contends that "[t]o allow Wright to seek damages in a law action would be contrary to the well established doctrine of res judicata which prevents splitting of a cause of action." In support of this contention, Castles relies upon Jones v. Morris Plan Bank, 168 Va. 284, 191 S.E. 608 (1937). Jones involved two law actions based on one installment contract containing an acceleration clause making all monies immediately due upon default. In the first action, the creditor sued the debtor for a judgment on two delinquent installments. In the second action, the creditor sought judgment on the remaining installments. We held that res judicata barred the second action because all installments were due and owing under the acceleration clause when the creditor instituted the first action. Accord Snyder v. Exum, 227 Va. 373, 315 S.E.2d 216 (1984). We reasoned that the contract was indivisible and, therefore, the creditor could maintain only one action to recover the balance owing. We said when "the same evidence will support both actions there is but one cause of action." Jones, 168 Va. at 291, 191 S.E. at 610. The present case, unlike Jones, involves a prior equity suit followed by a tort action at law for monetary damages. Clearly, evidence necessary to obtain an injunction enjoining Castles from unlawfully interfering with Wright's use of the right of way differs from evidence necessary to prove that Castles slandered Wright's title and interfered with Wright's contractual relations. In the chancery suit, Wright relied on the equitable doctrines of estoppel, waiver, and laches to support his contention that the restrictive covenant prohibiting heavy hauling over the right of way was unenforceable. Injunction is an extraordinary remedy, available only in equity. To obtain the injunction, Wright had to prove that he would suffer irreparable harm if the injunction were not granted and that he did not have an adequate remedy at law. See, e.g., Carbaugh v. Solem, 225 Va. 310, 314, 302 S.E.2d 33, 35 (1983). Wright bases his present law action upon alleged torts. To prove slander of title, Wright must show that the defendants acted with malice or in reckless disregard of the truth or falsity of the statement placed on the sign. See generally, Annot. 4 A.L.R. 4th 532. To prove tortious interference with a contract, Wright must show that the defendants intentionally and improperly interfered with his contractual relations by causing a third party not to enter into a prospective contract with him. See Chaves v. Johnson, 230 Va. 112, 120-21, 335 S.E.2d 97, 102-03 (1985); Allen Realty Corp. v. Holbert, 227 Va. 441, 449, 318 S.E.2d 592, 597 (1984). Wright also must prove compensatory damages; and to recover punitive damages, he must show that the defendants acted with "ill will, malevolence, grudge, spite, wicked intention or a conscious disregard of [his] rights." Lee v. Southland Corp., 219 Va. 23, 27, 244 S.E.2d 756, 759 (1978).

- 120 - We conclude that the present case is controlled by Worrie v. Boze, 198 Va. 533, 95 S.E.2d 192 (1956). In Worrie, the plaintiffs brought a law action claiming compensatory and punitive damages for the fraudulent, willful, and malicious acts of the defendants, alleging that the defendants had conspired to breach an employment contract between the parties. The defendants pleaded res judicata, claiming that a prior equity suit brought by the plaintiffs barred the law action. The previous equity suit involved the same employment contract between the plaintiffs and defendants. The contract contained a covenant prohibiting the defendants from competing with the plaintiffs within a certain area for a stated period of time. The employment contract was terminated, and shortly thereafter the defendants opened a competing business in the restricted area. In the [Worrie] chancery suit, the plaintiffs asked for an injunction restraining the defendants from operating the competing business in violation of the covenant not to compete. Plaintiffs' bill contained "prayers for injunctive and general relief, but no prayer for an assessment of damages." Id. at 535, 95 S.E.2d at 194-95. Following the trial, the chancellor enjoined the defendants from violating the terms of the contract. Id. In support of their plea of res judicata in the subsequent law action, the defendants argued that the plaintiffs "based [their case] on the identical cause of action which was litigated in the former equity suit." Id. at 537, 95 S.E.2d at 196. We rejected this argument, stating that "while the causes of action in the two suits [were] closely related, they [were] not identical." Id. at 538, 95 S.E.2d at 197. In Worrie, we said that the purpose of the chancery suit was to enjoin the defendants from violating the restrictive provisions of the contract. Id. We noted that the issues in the equity suit were whether the contract was valid and enforceable and if so, whether it should be enforced. We observed, on the other hand, that the law action was based upon an alleged tort, i.e., conspiracy to induce breach of contract. We stated that the issues in the law case were (1) whether the defendants conspired to breach the contract, and (2) if so, whether the plaintiffs were entitled to recover damages for the defendants' tortious conduct. Id. Worrie and the present case are strikingly similar. The purpose of Wright's chancery suit was to determine the enforceability of the restrictive covenant. The issue was whether Castles, by his conduct, had rendered the covenant unenforceable. On the other hand, the issues in the present law action are whether (1) Castles maliciously and falsely slandered Wright's title, (2) Castles intentionally and improperly interfered with Wright's contractual relations, and (3) Wright is entitled to recover compensatory and punitive damages. In the present law action, as in Worrie, neither the causes of action nor the remedies sought are identical to those in the prior chancery suit. Thus, we hold that the trial court erred in sustaining Castles' plea of res judicata. Accordingly, we will reverse the judgment of the trial court and remand the case for further proceedings.

- 121 - Note: Res Judicata Preview

The topic of Res Judicata is explored in greater depth in Chapter 15 of these materials, where a variety of “finality and relitigation” topics are explored. A short preview: the national approach would be to say “if it would have been procedurally possible to bring the second claim as part of the first proceeding, it will be barred if raised separately later.” Under the reforms implemented as of 2006, it is procedurally possible to bring any equity claim in the same case as various legal claims arising from the same transaction or occurrence. And, finally, today we have a Virginia Rule of Court adopting the national "conduct, transaction or occurrence" standard for determining whether there has already been litigation of a claim sufficient to bar later actions. The operation of the new "Rule" of res judicata has not been explored by the Supreme Court as yet.

- 122 - SHEVEL'S, INC. v. SOUTHEASTERN ASSOCIATES, INC. 228 Va. 175, 320 S.E.2d 339 (1984)

RUSSELL, J., delivered the opinion of the Court:

This is a landlord-tenant dispute concerning the tenant's contractual liability for dues to a shopping center merchants' association. Southeastern Associates, Inc., the landlord, was developer of a shopping center known as Chesterfield Mall. Shevel's, Inc. - Chesterfield was a tenant operating a Shevel's men's clothing store in the mall. The landlord brought a civil warrant in the Fine Men's Clothes general district court against the tenant for dues claimed to be owed by the tenant to the Since 1968 merchants' association. All tenants, pursuant to their respective leases, were required to belong to the association. The tenant removed the case to the circuit court, which ordered the landlord to file a bill of particulars and the tenant to file responsive pleadings thereafter. The landlord's bill of particulars specified that the tenant's liability was based upon the terms of its lease, which required the tenant to maintain membership in the merchants' association and to pay "such reasonable assessments as should be fixed from time to time by the Association for the purpose of creating and maintaining a fund for the general promotion and welfare of the Center as a whole." The tenant responded by filing grounds of defense, containing affirmative defenses. Among other things, the tenant alleged that the language of the lease did not state the true agreement of the parties, and that the lease took its existing form by reason of mutual mistake or, in the alternative, unilateral mistake by the tenant accompanied by fraud or inequitable conduct by the landlord. On the tenant's motion, the case was transferred to the chancery side of the court, apparently because the tenant's grounds of defense concluded with a prayer that the chancellor reform the lease to reflect the true agreement of the parties. The tenant filed no cross-bill. The landlord filed a motion to strike the tenant's grounds of defense, contending that reformation could not be invoked by a defensive pleading; it was only available as "an independent cause of action." The motion to strike was denied. The landlord assigns cross-error to the transfer from law to equity and the court's action in overruling its motion to strike. The case was tried ore tenus. The landlord called M. Shevel Siff, the tenant's president, as an adverse witness, and then offered the testimony of Cecil D. Jeter, its own president. After this testimony, the landlord rested and made a motion for summary judgment. The court granted the motion, ruling that Siff's testimony precluded the tenant, under the doctrine of Massie v. Firmstone, 134 Va. 450, 114 S.E. 652 (1922), from taking any position more favorable than permitted by the "four corners of the lease," and that the lease, which was in evidence, clearly entitled the landlord to recover the disputed dues. The tenant had no opportunity to present its case.

- 123 - [The Court held that the tenant had pled defenses and exceptions to the statute of frauds sufficient to permit it to offer supporting proof, and hence that the summary denial of its claims was erroneous. In passing the court commented on the summary judgment remedy in equity. Ed.]. Summary judgment is a drastic remedy which is available only where there is no material fact genuinely in dispute. . . [The court explained that the tenant had not conceded away its case, and should have been accorded an opportunity to present proof. It then turned briefly to the procedure by which the cause found its way into the ]. We find no merit in the landlord's assignment of cross-error. The case was transferred to the chancery side of the court because the tenant's prayer for the affirmative equitable relief of reformation, although contained in a defensive pleading, was treated by the court as a cross-bill. Upon transferring the case to equity, the court entered an order requiring the landlord, within fourteen days, to file its responsive pleadings to "defendant's affirmative defenses." The landlord complied, pleading laches and other equitable defenses to the tenant's prayer for reformation. Thus, pursuant to the court's order, the parties also treated the answer as a cross-bill. These proceedings correctly placed the landlord in a defendant's position as to the claim for reformation and resulted in a proper allocation of the order of pleadings and the burden of proof. Traditionally, in Virginia, where a defendant has set up a claim for affirmative relief in a defensive pleading, the court, in order to do complete justice between the parties and avoid a multiplicity of suits, may in its discretion treat an answer as a cross- bill by appropriate order. In such a situation the parties must comply with Rules [of Court.]

- 124 - Notes on "Transfer" and Trial Transfer is Gone. Code § 8.01-270, which provided for the “transfer” of a case from “law” to “equity,” or vice versa, was abrogated effective January 1, 2006, because it no longer matters whether a party in the circuit court proceeding seeks forms of equitable relief apart from – or in addition to – dollar damages. As a result, in cases appealed (or “removed”) from the general district court to the circuit court it no longer will be the situation that the case lands on one side of the circuit court or the other. There is only one form of circuit court civil case, and the parties may pursue any remedy to which they may be entitled in the single proceeding. Thus the “transfer” step taken in Shevel’s is no longer necessary. Jury Trial Waiver? There are specific and detailed provisions in the reformed Part Three of the Rules of Court which went into effect in 2006 dealing with jury demands and the mechanisms for affording a party the jury trial rights to which that party is entitled. One issue latent in Shevel’s is the fact that the plaintiff originally pled that case in the general district court. There is no jury trial in general district court civil litigation. Thus there is a good argument that a plaintiff – having voluntarily elected a forum in which there is no jury trial right – will not be able to “resurrect” a claim to a jury trial right if the case is appealed or removed to the circuit court. Note that a party with a jury trial right is not obligated to insist upon that procedure. And, if a party with such rights fails to request a jury, or to object to -only proceedings, the right will be lost by waiver.

- 125 - Editor’s Note: the following case was the “horrible example” of Virginia litigation problems under the separation of law and equity procedure, cited as a paradigm examples by reformers in the discussions leading to the 2006 fundamental changes on law and equity in Virginia. The case has been kept in these readings in order to highlight several issues and permit discussion of the effectiveness of the landmark changes of 2006. It illustrates problems that are still with us, and frames the questions as to which have been ameliorated in the current system, and which remain.

STANARDSVILLE VOLUNTEER FIRE CO. v. BERRY 229 Va. 578, 331 S.E.2d 466 (1985)

JUSTICE RUSSELL delivered the opinion of the Court. This appeal arises out of a protracted controversy concerning the location of an easement. The dispositive question is whether the court erred in transferring an action of trespass to chancery, depriving the plaintiff of the right of trial by jury. Because we must reverse on procedural grounds, the factual background requires only brief discussion. In 1965, the Stanardsville Volunteer Fire Company, Incorporated (Fire Company), purchased a parcel of land containing .84 acres along the north side of Route 33 in the Town of Stanardsville from parties named Huff. In the conveyance, the Huffs reserved the following easement for the benefit of their remaining lands, which lay north of the parcel conveyed to the Fire Company: The grantors expressly reserve unto themselves, their heirs, assigns, and transferees a 20 foot right of way across said property leading north from U.S. Highway No. 33 and parallel to the Grover C. Morris boundary line to the retained lands of the said parties of the first part. The reservation of this easement is intended as a perpetual easement to run with the land. This 20 foot right of way adjoins the Grover C. Morris property and is parallel thereto being located on the eastern portion of the property herein conveyed. The grantee, Stanardsville Volunteer Fire Company, Inc., shall also have perpetual and joint use of this right of way. The Grover C. Morris line constitutes the eastern boundary of the parcel conveyed. Subsequently, the Fire Company erected its fire house on the .84-acre lot, facing Route 33, and David F. Berry and Doris M. Berry, his wife, acquired the Huff farm to the north, thus becoming the Huffs' successors in title and interest to the 20-foot easement. The easterly 20 feet of the .84-acre lot, which was encumbered by the recorded easement, has been virtually impassable until the present time because of its elevation high above the grade of Route 33, resulting in a steep bank at the edge of the highway. It was, at the time of trial, partially obstructed by trees. Soon after it acquired the .84-acre lot, the Fire Company cleared and graded a level area, west of the 20-foot strip, as a parking lot, with an entrance from Route 33. The entrance occupied a small part of the southwesterly corner of the 20-foot strip, which was cut down to ease the grade.

- 126 - In 1968, a corporation then partially, and later entirely, owned by David F. Berry was engaged in developing a subdivision on a part of the Huff farm north of the Fire Company lot. The corporation laid a gravel base, 10-12 feet wide, from the Fire Company parking lot, through the Fire Company's land to its northerly line, added gravel to the Fire Company's entrance drive from Route 33, removed a fence which ran along the northerly boundary of the Fire Company's lot, and began to use the road thus formed for ingress and egress across the Fire Company's property. Later, the Berrys began to use the residue of the Huff property for farming operations and continued to use the road for that purpose. Although the road occupies the southwesterly and northwesterly corners of the 20-foot strip, most of its length runs through the Fire Company lot entirely west of and outside the 20-foot strip. A protracted series of negotiations, not pertinent here, ensued between the Fire Company and the Berrys. On September 15, 1980, the Fire Company brought matters to a head by erecting a barbed-wire fence parallel to, and 22 feet west of, the Grover Morris line, completely obstructing the existing gravel road. David F. Berry responded by personally removing those parts of the fence which obstructed the road, using a farm tractor. On October 14, 1980, the Fire Company initiated this proceeding as a motion for judgment seeking compensatory and punitive damages against David F. Berry for trespass upon and damage to its property lying west of the 20-foot strip. The court sustained a demurrer and the Fire Company, with leave of court, filed an amended motion for judgment. Berry filed a "petition for temporary injunction" in the Fire Company's action at law. The Fire Company moved to dismiss it, on the ground that injunctive relief was not available in an action at law. Berry thereafter abandoned the petition. On January 20, 1981, Berry filed an independent bill of complaint on the chancery side of the court, praying for a temporary injunction to restrain the Fire Company from interfering with his continuing "use and enjoyment of the existing outlet road currently located on the property of the [Fire Company]." On March 3, Berry filed motions in the chancery cause for leave to amend the bill to seek a permanent injunction and also to transfer the Fire Company's action at law to the chancery side of the court and to consolidate the two cases. On April 13, over the Fire Company's objection, the court granted these motions and ordered that the Fire Company's action at law be transferred to equity and consolidated with Berry's suit for injunction. David F. Berry, now joined by his wife Doris M. Berry, filed an amended bill of complaint in three counts. Count I alleged that an easement by implication or by express reservation, over the existing outlet road, was vested in the Berrys. The Berrys later abandoned the claim of easement by implication and the court struck the evidence respecting express reservation. Count II alleged that the Berrys were entitled to an easement by estoppel, based upon the Fire Company's consent to the present location of the road and the Berrys' improvements thereon and continued use thereof with the Fire Company's acquiescence. Count III alleged that the Fire Company had given the Berrys an irrevocable license to use the existing road. The Fire Company demurred to all counts. The court overruled the demurrers and ordered the Fire Company to file responsive pleadings.

- 127 - - 128 -

The Fire Company filed eight separate pleas to Count II and nine to Count III, demanding jury trial on each. The Berrys moved to strike all the pleas as to Count II as insufficient. The court granted the motion and struck all pleas as to Count II and two of the pleas to Count III. The court's order, entered July 14, directed the Fire Company to "file its further pleadings in response to . . . Count Two of the Amended Bill of Complaint, including an answer, within twenty-one days of the date of this Order." The order set Count II for trial on September 14, 1981, ore tenus, but did not set Count III. The court took the position, with which counsel expressed no serious disagreement, that the issues in Count III were subsumed in those raised by Count II and that the trial would prove dispositive of all issues remaining in the case. Within the 21 days fixed by the order of July 14, the Fire Company filed an answer and four "further pleas" to Count II, each ending with the traditional formula invoking the right of jury trial: "AND OF THIS the [Fire Company] puts itself upon the Country." The first plea stated that the Fire Company had never consented to any location of the road outside the 20-foot strip; the second stated that the Fire Company had not interfered with the use or location of any roadway to which it had ever consented; the third alleged that it had never consented to any location of the roadway which it has later blocked; the fourth alleged that it had never consented to any easement in the Berrys over the existing road. On August 21, the court sustained the Berrys' motion to strike the four "further pleas" on the ground that they were "not timely filed" and because "they do not present a single factual issue for determination by a jury; [and] that such pleas, even if true, would not result in an end to the litigation regarding Count II." The case was tried ore tenus on September 14-16 and taken under advisement on briefs. After further oral argument, the chancellor ruled that the location of the easement had been changed from the 20-foot strip to the present location of the road by virtue of the Fire Company's express or implied consent. The court entered a decree on December 18, 1981, declaring that the Berrys were the beneficiaries of an easement, 20 feet wide, along the outlet road as it existed on the Fire Company's property on September 15, 1980, and enjoining the Fire Company from any interference with its use. We granted the Fire Company an appeal. Code § 8.01-270 provides, in pertinent part: No case shall be dismissed simply because it was brought on the wrong side of the court, but whenever it shall appear that a plaintiff has proceeded at law when he should have proceeded in equity, or in equity when he should have proceeded at law, the court shall direct a transfer to the proper forum. This statute applies only where a plaintiff has erroneously brought his case on the wrong side of the court. It furnishes no authority for a transfer where the plaintiff has invoked the proper forum. Quick v. Southern Churchman Co., 171 Va. 403, 415, 199 S.E. 489, 494 (1938). Because trespass quare clausum fregit fell within one of the original nine common-law forms of action, the Fire Company brought its action on the proper side of the court, and the court erred in transferring the action to equity over the Fire Company's objection.

- 129 - The Constitution of Virginia, art. I, § 11, provides in pertinent part: "That in controversies respecting property, and in suits between man and man, trial by jury is preferable to any other, and ought to be held sacred." This provision is inapplicable to those proceedings in which there was no right to jury trial when the Constitution was adopted, Bowman v. Va. State Entomologist, 128 Va. 351, 372, 105 S.E. 141, 148 (1920). Therefore it has no application to ordinary suits in chancery, W.S. Forbes & Co. v. Southern Cotton Oil Co., 130 Va. 245, 263-64, 108 S.E. 15, 21 (1921), but it is clearly applicable to common-law actions seeking damages, including punitive damages, O'Brien v. Snow, 215 Va. 403, 405, 210 S.E.2d 165, 167 (1974). Because the transfer to equity deprived the Fire Company of its right to jury trial, the error was not harmless. Cf. Quick, 171 Va. at 416, 199 S.E. at 494 (plaintiff's action at law erroneously transferred, but error harmless because plaintiff voluntarily filed bill in equity and obtained complete relief there).9 The Berrys argue on appeal that if they should prevail in the action at law, the best result available to them would be a verdict finding them "not guilty" of trespass. Thus, they say, even though they could set up their equitable claim to an easement by estoppel as a defense to the action at law, pursuant to Rule 1:4(k), they could not obtain complete relief without a transfer to the equity side, where they could be protected by an adjudication of their right to the easement coupled with injunctive relief against interference. They rely on Thomas v. Lauterbach, 205 Va. 176, 178, 135 S.E.2d 781, 783-84 (1964), for the proposition that where "complete relief cannot be obtained on the side of the court where the case was originally brought, the court should transfer the case to that side of the court where complete relief may be granted in one proceeding." This reliance is misplaced. In Thomas, a plaintiff brought an action at law for a real estate commission. During the pendency of his action, he discovered from the defendant's pleadings that, because of an amended contract that the plaintiff did not know the defendant had signed, the plaintiff was actually entitled to a conveyance of land in kind as his commission. The defendant's pleadings made it clear that the controversy was cognizable only in equity. The plaintiff therefore moved for a transfer in order that he might amend his pleadings to seek specific performance. We affirmed the trial court's transfer of the action, based upon the plaintiff's implicit concession that he had inadvertently brought his action on the wrong side of the court and discovered his error only when the defendant filed responsive pleadings. Here, the Berrys' contention that they cannot receive complete relief on the law side is true as far as it goes, but their remedy is not a transfer. If they had wished to test their property right before undergoing jury trial in the trespass case, they were entitled to bring a chancery suit seeking vindication of their claim to an easement by estoppel, and to enjoin prosecution of the Fire Company's action at law until their property claim could be determined. If the Berrys were successful in equity, the injunction could be made permanent. If they should fail to prevail in equity, the Fire Company's right to

9 In Shevel's Inc. v. Southeastern Assoc., 228 Va. 175, 320 S.E.2d 339 (1984), we held discretionary a transfer from law to equity where the defendant's grounds of defense asked for affirmative equitable relief which the court treated as a cross-bill. The plaintiff in Shevel's, Inc., waived jury trial, however, and contended only that he was entitled to a bench trial at law rather than in equity. Thus, Shevel's Inc. lacked the constitutional question involved here, where the transfer from law to equity affects a plaintiff's right to trial by jury. In the circumstances of Shevel's, Inc., and where jury trial is waived, a transfer remains within the court's discretion.

- 130 - proceed in the action at law would be unimpaired, and the issue of damages could be submitted to trial by jury. The Fire Company has assigned error to numerous other rulings below, but most of these are either subsumed in the foregoing or are not reached because of the procedural posture of the case. One assignment, however, requires discussion because of its significance in any further proceedings upon remand. Count I of the Berrys' amended bill has been eliminated from the case, as stated above, and we agree with the trial court's analysis to the effect that the issues under Count III are subsumed in Count II and would be disposed of by trial of Count II. Indeed, counsel virtually concede that there is but one factual issue to be tried in the chancery case: whether the parties, by express or implied consent, have agreed to relocate the easement from the original 20-foot strip to the present location of the road. If such consent is found at trial, the Berrys are entitled to equitable relief; otherwise, the Fire Company is entitled to submit its claim for damages in trespass to a jury. We further agree with the trial court's holding that the eight pleas originally filed by the Fire Company to Count II were insufficient, but we do not agree that this can be said of the four "further pleas" the Fire Company filed. Although overlapping and somewhat redundant, each "further plea" set up a variation on a single state of facts which, if true, would end the litigation in the Fire Company's favor. Each plea attempted to refute the factual allegations upon which Count II was based, by denying the existence of the prerequisite conditions for the creation of an easement by estoppel. In the circumstances of this case, each, if proved, would constitute a complete defense to the Fire Company and is, therefore, "sufficient" as that term is used in chancery practice. E. Meade, Lile's Equity Pleading and Practice, § 201, p. 115 (3d ed. 1952).Cf. Bolling v. Acceptance Corporation, 204 Va. 4, 8, 129 S.E.2d 54, 56-57 (1963) (a plea of partial set-off is insufficient, because it would not end the case). The defense by plea is used where the defendant desires to present a single state of facts (although possibly made up of numerous circumstances), as a defense to the plaintiff's suit. The advantage which the plea presents over the answer is that it shortens the litigation -- reducing the issue, as it does, to a single point. E. Mead, supra, § 199, p. 114 (3d ed. 1952). The "further pleas" met the foregoing test. Further, they were timely because they were filed on August 4, within the 21-day period given to the Fire Company by the court's July 14 order in which to file "further pleadings in response . . . including an answer." They were filed before the answer. Thus, the court erred in striking them. Here again, the error, although procedural, was not harmless because it had the effect of depriving the Fire Company of the right of trial by jury. Code § 8.01-336 provides in pertinent part: A. The right of trial by jury as declared in Article I, § 11 of the Constitution of this Commonwealth and by statutes thereof shall be preserved inviolate to the parties. * * * *

- 131 - D. Trial by jury of plea in equity.--In any action in which a plea has been filed to an equitable claim, and the allegations of such plea are denied by the plaintiff, either party may have the issue tried by jury.10 . . . . We have repeatedly held that this section and its predecessors provide for a jury trial as a matter of right on the motion of either party. There are distinct differences between the trial of an issue out of chancery, now covered by Code § 8.01- 336(E), and trial of an issue on a plea in equity, with which we are here concerned. In the case of an issue out of chancery, the decision whether to impanel a jury rests in the chancellor's discretion; he may decide to discharge the jury before verdict, and its findings are merely advisory, "informing the conscience of the chancellor." In the case of an issue on a plea in equity, not only does either party have the right to a jury trial, but the jury may not be discharged before verdict and its verdict, when returned, is as binding and conclusive upon the factual issue submitted to it as is a jury verdict in an action at law. . . . In striking the "further pleas," the court removed the cause from the operation of Code § 8.01-336(D), and thus abrogated the Fire Company's jury trial of right on the single issue remaining to be determined. The Fire Company was required to go to trial on its answer, where a jury trial would have been merely discretionary as an issue out of chancery. The issue was actually tried ore tenus, as stated above. It follows that the Fire Company, on remand, will have the right to submit the factual issue presented by its "further pleas" to a jury's determination. We will reverse the decree appealed from and remand both the law and the chancery cases to the trial court, with direction to reinstate the Fire Company's action of trespass on its law docket, and for such further proceedings consistent with this opinion as the parties may wish to pursue.

10 The right of jury trial conferred by this section post-dates the adoption of the Constitution. It was evidently prompted by a remark made by Edmund Pendleton, President of the Court, in Pryor v. Adams, 1 Call (5 Va.) 382, 394 (1798), indicating that no such right existed at that time. It came into the Code with the revision of 1819, and has been carried forward, with strengthening amendments, to the present. For a thorough discussion of its history, see Towson v. Towson, 126 Va. 640, 647, 102 S.E. 48, 51 (1920).

- 132 -

Notes: Procedural Life after Stanardsville – Problems Solved?

Problems Solved? The gyrations in Stanardsville Volunteer Fire Department v. Berry became campaign poster material in the fight to bring Virginia into the Twentieth Century (a bit late as of 2005 don’t you think?) by unifying procedures so that a single form of civil action will accommodate the parties’ disparate claims – whether they “sound” at law or in equity under traditional principles. Let’s map out whether the January 2006 changes obviate some or all of the problems which beset the parties and the courts in Stanardsville. Forcing the Fire Company to litigate on a “different side of court.” The Berry’s would no longer, as of 2006 and beyond, be able to force the Fire Company to litigate in a posture not of its choosing. If the Fire Company were to sue today in circuit court, it could present its arguments, and the Berry’s could raise defenses, or make counterclaims for affirmative relief, all in a single proceeding. No transfer would be needed, and the parties would – no matter what – be in the “right court.” Code § 8.01- 270, quoted in the opinion, has been abrogated as unnecessary. Depriving the Fire Company of its jury trial rights. The Court notes in the foregoing opinion that the Fire Company “put itself upon the country”, a traditional phrasing for demanding a jury trial. Under the reforms implemented in 2006, the same proceeding will hear all claims, and thus the jury demand can be honored, even if the Berrys raise equitable claims that will not be heard by a jury. Both claims can be litigated simultaneously, with the jury resolving those issues committed to it, while the judge decides other issues. The mechanics of that process are explored elsewhere in these VIRGINIA PRACTICE AND PROCEDURE READINGS. Enjoining the Proceeding at Law. One of the most unbelievable aspects of the way Virginia litigated multiple claims for the 300 years prior to 2006, is reflected in the Court’s comment in the Stanardsville opinion that the equity plaintiffs (in that case, the Berrys) had the right to enjoin the proceeding at law. There was a presumed precedence of the equitable case over the law case, and the routine or presumed answer was to allow the “chancellor” to enjoin proceedings at law until the equity case was resolved. The obvious effect of this approach was to allow judges to decide a number of fact issues – all issues needed to decide the equity claims pending on that “side of court.” If those fact determinations ended the case, the injunction against proceeding at law was then made permanent. The phenomenal net effect of that was that a party with a jury trial right at law would never get a jury hearing. The equity proceeding went first, and if it resolved the case there would never be a trial in the “legal” proceeding. Under the new regime implemented in 2006 it will be possible for the trial judge to structure the hearing and decision process to more completely effectuate the right to jury trial. In most jurisdictions, the jury is charged with hearing and deciding all issues that are necessary to its findings, and the judge becomes “bound” by the jury’s fact-finding in ruling on bench issues. It remains to be seen how that process is worked out in Virginia, but this important change is enabled by the single-side-of court initiative. The Supreme Court approved a Rule to this effect a few years after the "merger" of all civil procedure into one form of pleading. The new provision adopts the national view preserving all aspects of the jury's factfinding duties. It provides:

- 133 -

Rule 3:22. Trial by Jury or by the Court. * * * * (e) Trial by Mixed Jury and Non-Jury Claims. In any case when there are both jury and non-jury issues to be tried, the court shall adopt trial procedures and a sequence of proceedings to assure that all issues properly heard by the jury are decided by it, and applicable factual determinations by the jury shall be used by the judge in resolving the non-jury issues in the case.

Separate Suits and Compulsory Counterclaims. As of 2006, the Virginia doctrine that counterclaims are never compulsory has not been changed. Thus it would not be required for the Berrys to file their contrary claims as counterclaims in the Fire Company’s initial trespass action. If they chose to do so, they could file an independent complaint for opposite relief. Since Virginia does not have a specific rule on consolidation of actions arising from the same transaction or occurrence, there is no assurance that the two resulting lawsuits would be coordinated. One may hope that the parties and the judge would work out stipulations for use of discovery fruits from one action in the preparations for the other, and other economies. Cases can be consolidated for a joint trial, but it is not required that the trial judge grant this relief. One result of this situation is that if the Berrys filed a separate complaint seeking only equitable relief, the possibility exists even under the procedures implemented in 2006 that the equity case could be matured for trial earlier than the Fire Company’s law case. In that situation, the bench-only determinations of the trial judge in the first case tried could have the effect of mooting some or all of the issues in the as-yet-untried legal claim. There is no reason to think that the case filed first would be tried first. Does this undercut the value of the 2006 reforms? Special Pleas Today. Code § 8.01-336 has been preserved in the 2006 reforms of Virginia pleading and practice, in substantially the form quoted in Stanardsville. The net result of that is that there could be a litigation of purely equitable claims today, in which situation no party would have a constitutional right to a jury trial, but – under this Code section – if the defendant asserts that there is a single, dispositive factual issue on which the entire claim rests, there can be a “statutory right” to a jury trial on that one factual issue (not all contentions in the case). While the approach of the Supreme Court of Virginia on this point in Stanardsville is problematic, the Court does seem to say that the Fire Company’s special pleas were proper pleas in equity. Thus in 2006 and beyond, a jury trial right would be protected by § 8.01-336 if a defendant similarly situated pleads that the issue of, for example, consent or nonconsent to use of a different easement route is dispositive of the case.

- 134 -

- 135 - G. Pleas and Advisory Juries

NELMS v. NELMS 236 Va. 281, 374 S.E.2d 4 (1988)

JUSTICE POFF delivered the opinion of the Court. In a "Bill of Complaint for Declaratory Judgment" expressly invoking the chancery jurisdiction of the trial court, Herbert C. Nelms asked the chancellor to declare that Joseph Eugene Nelms, Sr. (Mr. Nelms), was competent to execute a deed conveying his homeplace to his son, Herbert. Herbert named his two brothers, Joseph Eugene Nelms, Jr., and Joseph Hunter Nelms (Hunter), and their father as respondents. Mr. Nelms died before trial and later, when Herbert died, his widow, Barbara Nelms, was substituted as complainant. A guardian ad litem, appointed to defend the interests of Hunter, and counsel for Eugene filed an answer and a cross-bill praying that the deed "be decreed null and void" on the grounds that Mr. Nelms was incompetent to execute the instrument and that the deed was "a result of undue influence". Eugene moved for an issue out of chancery on the question of mental competency raised by his cross-bill. Denying complainant's motion to refer the cause to a commissioner in chancery, the chancellor ruled from the bench that he would submit the competency question to the jury by an interrogatory. The chancellor did not state the ground upon which he rested his ruling. The chancellor seated a jury of seven to hear the evidence. The record shows that Mr. Nelms, although illiterate, had been the owner and operator of three successful business enterprises. He suffered from diabetes, and in 1978 he sustained a serious heart attack. As a consequence, his doctors instructed him to follow a strict diet and to take medicine daily. Mr. Nelms did neither on a regular basis. In his will, dated April 11, 1980, Mr. Nelms devised his homeplace in equal shares to his three sons. On January 12, 1981, he executed a deed of gift conveying the same property to his son Herbert. After his mark had been made and witnessed, Mr. Nelms learned that the deed did not contain a provision reserving a life estate. He instructed the attorney, Mrs. Ann Jones, to add such a clause to the document and send him a copy of the deed as revised. Mrs. Jones followed his instructions, but she did not record the instrument. Prompted by the results of legal research, she decided that the deed should be re-executed in a second and formal ceremony. Because Herbert had Deed of Gift told her that Eugene might contest the conveyance, I JOSEPH EUGENE NELMS, being of sound she arranged for the mind, do hereby make this Deed of Gift, for the disposition of all my worldly ceremony to be held in the property. presence of a medical . . . . 6. To my loving son Herbert I witness. With Mr. Nelms' bequeath my fishing tackle, the framed photograph of great aunt Martha, and the consent, she made an home where I have lived my adult life and appointment for Dr. in which he was reared. . . . . Desmond J. Longford to administer a blood-sugar test and cardiac

- 136 - examination. Dr. Longford conducted the physical examinations and a mental examination in his office on February 2, 1981. Concerning the need for the physical tests, he explained that "when blood sugar of a diabetic is grossly out of control, it can affect . . . behavior and . . . state of mind . . . such that one can be absolutely confused not knowing what one was doing". He said that a person's mental capacity also would be impaired "[i]f the heart is not beating properly . . . [because] the oxygenation of the blood going through the lungs is affected, so you would get a relative anoxia or shortness of oxygen supply to the brain." The clinical tests revealed that Mr. Nelms' "blood sugar at that time was well controlled", that he had "no sugar in his urine", and that his heartbeat, pulse, and blood pressure were "in good shape." Evaluating the results of the mental examination, Dr. Longford said that Mr. Nelms "was in full possession of . . . all his mental faculties." Dr. Longford witnessed Mr. Nelms' mark, and Mrs. Jones' clerk notarized the deed. "I'm quite categorically sure he knew what he was doing," Dr. Longford added, "and if I had had any doubt I wouldn't have signed it." The complainant's evidence consisted primarily of the testimony of Dr. Longford, Mrs. Jones, and the notary public, the three persons who witnessed execution of the deed of gift. In summary, their testimony showed that the contents of the deed were explained to Mr. Nelms, "paragraph by paragraph"; that he correctly identified the property involved; that he remembered the date of his birth and the name of the President; that he knew the names of his three sons; that he wanted Herbert to have his homeplace because, he explained, Herbert and his wife had been caring for him; that he inquired what effect the inter vivos conveyance might have on the tax liability of his estate; and that all of Mr. Nelms' replies to questions posed to him by Mrs. Jones and Dr. Longford were not merely affirmative or negative but narrative and responsive as well. The three witnesses were unanimous in their conclusion that Mr. Nelms was mentally competent at the time he executed the deed of gift. The witnesses called by the respondents testified that, following Mr. Nelms' heart attack in 1978, he began to exhibit symptoms of progressive senility. He was careless in his attire, sometimes appearing in public with mismatched clothes, with garments turned wrong side out, and with one sock missing. His memory for names was faulty. His behavior was abnormal. On several occasions, friends found him wandering in a daze and asking for a glass of water. He attempted to buy sandwiches at a flower shop. He put salt in his coffee. He tried to get a restaurant to refund money he had paid for food he had ordered and not eaten. He called for an ambulance because he liked to see the blinking lights. He sat in a chair in his office and pretended that he was driving a truck. As the transcript reveals and as Eugene's counsel conceded in oral argument, however, all such testimony related to events that occurred at times other than the time the deed was executed. At the conclusion of the evidence, the chancellor ruled that there was no evidence to support the respondents' allegation of undue influence, instructed the jury on the law

- 137 - of mental competency, and submitted for the jury's determination the following interrogatory:

Did Joseph Eugene Nelms, Sr., possess mental capacity on February 2, 1981, to execute his deed dated January 12, 1981, conveying his home to his son, Herbert C. Nelms, reserving unto himself a life estate in said real estate?

The jury responded in the negative. In a final decree entered May 2, 1985, the chancellor found that "the verdict is amply sustained by the evidence", ruled that the verdict should be "confirmed", declared the deed of gift "null, void and [of] no effect", and dismissed the bill of complaint. . . . As appears from the language of the final decree, the chancellor treated the jury's response to the interrogatory as a conventional jury verdict. Specifically, he rested his conclusion that Mr. Nelms was mentally incompetent to execute the deed on a finding that "the verdict is amply sustained by the evidence" and should be "confirmed". We are of opinion, however, that the jury was misinformed on the burden of proof and, consequently, that the chancellor's reliance on the verdict was misplaced. [Discussion omitted] The question whether it was proper to empanel a jury was raised below and argued on appeal. That question likely will arise in a new trial, and we will consider it now. The chancellor did not specify the ground upon which he based his decision to submit the question of mental competence to a jury. He treated the jury's response to the interrogatory as a conventional jury verdict, however, and we assume, as the respondents do, that he relied upon Code § 8.01-336(D) which provides as follows: In any action in which a plea has been filed to an equitable claim, and the allegations of such plea are denied by the plaintiff, either party may have the issue tried by jury. Respecting that subsection, we have recently said that "[i]n the case of an issue on a plea in equity, not only does either party have the right to a jury trial, but the jury may not be discharged before verdict and its verdict, when returned, is as binding and conclusive upon the factual issue submitted to it as is a jury verdict in an action at law." Stanardsville Vol. Fire Co. v. Berry, 229 Va. 578, 587, 331 S.E.2d 466, 471-72 (1985). We applied that subsection in Berry because the respondent had filed pleas in equity and, under Rule 2:10, the complainant had denied the allegations of the pleas. In our view, a plea, whether at law or in equity, is a discrete form of defensive pleading. As distinguished from an answer or grounds of defense, it does not address the merits of the issues raised by the bill of complaint or the motion for judgment. Yet, a plea is a pleading which alleges a single state of facts or circumstances (usually not disclosed or disclosed only in part by the record) which, if proven, constitutes an absolute defense to the claim.

- 138 - Familiar illustrations of the use of a plea would be: The statute of limitations; absence of proper parties (where this does not appear from the bill itself); res judicata; usury; a release; an award; infancy; bankruptcy; denial of partnership; bona fide purchaser; denial of an essential jurisdictional fact alleged in the bill, etc. E. Meade, LILE'S EQUITY PLEADING AND PRAC., § 199, p. 114 (3d ed. 1952). Here, the respondents filed general answers and a cross-bill. In Bolling v. Acceptance Corporation, 204 Va. 4, 129 S.E.2d 54 (1963), the complainant filed a bill of complaint to enforce a conditional sales contract. On appeal, the respondents contended that "the chancellor erred in denying them a jury trial on the issues raised by their 'pleas.'" Id. at 7, 129 S.E.2d at 56. Referring to the statutory ancestor of Code § 8.01-336(D), we said: [This provision of the Code] requires that the pleading filed by a defendant, upon which the plaintiff may take issue and as to which either party may then demand a jury trial, be, in form and in substance a plea, and not merely an answer or, as in the case before us, an answer and cross-claim. The pleadings filed by the Bollings, were not, in form, pleas as contemplated by [the Code]. They were not so styled, but instead bore the title of "Answer and Cross-Claim." The language used in the pleadings was not that of a plea, but that of an answer and cross-claim. Section [8.01-336(D)] was not mentioned in the pleadings, nor was any demand for a jury trial contained therein. The pleadings were not sufficient to put the complainant, or the chancellor, on notice that the defendants intended them to be anything other than that which they were styled, or to invoke the duty imposed upon the chancellor under [8.01-336(D)]. Applying the rule in Bolling, we hold that the pleadings the respondents filed were not pleas in equity within the intendment of Code § 8.01-336(D). Yet, the question occurs whether the chancellor's decision to submit an interrogatory to a jury was authorized under Code § 8.01-336(E). Unlike a jury's response to an interrogatory submitted under subsection (D), a jury's findings under subsection (E) are not "binding and conclusive" but "are merely advisory, 'informing the conscience of the chancellor.'" Berry, 229 Va. at 587, 331 S.E.2d at 471. Code § 8.01-336(E) provides: In any suit in equity, the court may, of its own motion or upon motion of any party, supported by such party's affidavit that the case will be rendered doubtful by conflicting evidence of another party, direct an issue to be tried by a jury. As we construe subsection (E), the chancellor may, upon the motion of any party, direct an issue out of chancery whenever the facts stated in the party's affidavit render the resolution of the cause doubtful. In the alternative, the chancellor may "of [his] own motion", submit an issue to a jury even "though not requested by either party." Hook v. Hook, 126 Va. 249, 254, 101 S.E. 223, 225 (1919) (citations omitted). In either event, the decision is one within the sound discretion of the chancellor.

- 139 - The object of an issue is to satisfy the conscience of the chancellor in a doubtful case. But it is not to be directed merely because the evidence is contradictory. The conflict of evidence must be great and its weight so nearly evenly balanced that the court is unable or with difficulty able to determine where preponderance lies. It is a matter within the sound judicial discretion of the chancellor and is subject to review on appeal. Eastern Finance Co. v. Gordon, 179 Va. 674, 20 S.E.2d 522 (1942). Here, the complainant's bill of complaint expressly invoked the chancery jurisdiction of the trial court. In their cross-bill, the respondents prayed that "the said deed be decreed null and void". The parties agree that the cause was filed properly on the chancery side of the court. Because the jury was misdirected, however, we will reverse the decree and remand the cause for further proceedings consistent with the views expressed in this opinion.

- 140 - Notes on Juries and Pleas

Advisory Juries. In the 2005 legislation creating “one form of action” in Virginia, Code § 8.01-336 was preserved in all respects. The provision for an “issue out of chancery” was renamed, but not substantively changed. Thus in a case like Nelms where the issues are equitable by tradition and not historically subject to a jury trial right, the present statute preserves the option for what will henceforth be called an “advisory jury” to be empanelled to hear a particular issue. The statute does not specify the standards for using an advisory jury (just as it did not do so previously when this procedure was known as “an issue out of chancery”). Thus it appears that the interpretations in Nelms and the cases cited therein concerning the “issue out of chancery” standards will remain applicable to requests under the revised statutes and the “merged” procedure for all cases. On that understanding, the labeling of the request, and the need to show hotly contested factual testimony as a predicate for obtaining an advisory jury, matters discussed in Nelms, will still apply today. There are Pleas and then there are “Pleas.” Look at the example list of special plea topics set forth above in Nelms. These look very much like “affirmative defenses” in other legal systems, and the list tracks closely the Federal Rules of Civil Procedure’s listing in Rule 8(c) of matters of affirmative defense or avoidance which must be pled in a responsive pleading or they are waived (the so-called standard “affirmative defenses”). Do you agree with the Virginia Supreme Court in Nelms that the plea in that case was not of the type typically considered a unique affirmative excuse doctrine to avoid liability? Isn’t the father’s “capacity” very similar to “minority” or other typical defenses? If so, was this not a “plea” that could warrant a binding jury trial under Code § 8.01-336 rather than a mere advisory jury opinion? For that matter, given the listing of typical sorts of defenses, would the “plea” in Stanardsville qualify? Doesn’t the special plea in that case simply amount to a denial of the consent that the Berrys alleged? Is it unfair to assert that the reason the plea in Stanardsville was treated as a “plea in equity” and the defense in Nelms was treated as being one for which only an advisory jury was warranted, has very much to do with how those pleadings were labeled.? Finally, be sure you understand the difference in the binding effect of the jury’s verdict depending on whether it is merely advisory or on a “plea” to an equitable claim.

- 141 - Review of Jury Verdicts on Equitable Issues

ANGSTADT v. ATLANTIC MUTUAL INS. CO. 254 Va. 286, 492 S.E.2d 118 (1997)

JUSTICE KEENAN delivered the opinion of the Court: The primary issues in this appeal are (1) whether the defendants in a declaratory judgment suit were denied their right to a jury trial by the trial court's ruling that the jury was impaneled under Code § 8.01-336(E) to decide an issue out of chancery, and (2) whether the trial court erred in entering judgment contrary to the jury verdict. [The case involved entry of a $2 million judgment by default when an individual did not appear for a deposition as scheduled. An advisory jury concluded that the failure to cooperate was not willful, but the chancellor found the opposite, and entered judgment based on his own finding of willfulness. Ed.]. Citing Code § 8.01-188, the defendants requested that a jury be impaneled to determine issues of fact. This section provides that when a declaration of right or the granting of further relief based thereon shall involve the determination of issues of fact triable by a jury, such issues may be submitted to a jury in the form of interrogatories, with proper instructions by the court, whether a general verdict be required or not. The trial court granted this motion. . . . We . . . conclude that the defendants have waived the argument that they were entitled to a binding jury verdict in this declaratory judgment suit. The defendants failed to state an objection at the time the chancellor announced that he was impaneling the jury to decide an issue out of chancery and asked the parties to frame the issue. Further, when the chancellor asked the defendants' counsel how many questions should be included in the issue out of chancery, the defendants' counsel did not object to the use of that procedure, but discussed the substantive questions involved. Thus, we do not consider the merits of this argument. Rule 5:25. In addition, the defendants did not file a plea in equity, which would have entitled them to a jury trial under Code § 8.01-336(D). A plea in equity is a discrete form of defensive pleading that does not address the merits of the complaint, but raises a single issue of fact which, if proved, constitutes an absolute defense to the suit. Nelms v. Nelms, 236 Va. 281, 289, 374 S.E.2d 4, 9 (1988); Bolling v. General Motors Acceptance Corp., 204 Va. 4, 8, 129 S.E.2d 54, 56 (1963). A jury verdict returned under a plea in equity is as binding and conclusive on the factual issue submitted as a jury verdict in an action at law. Stanardsville Volunteer Fire Co. v. Berry, 229 Va. 578, 587, 331 S.E.2d 466, 471-72 (1985). We also find no merit in the defendants' argument that they were entitled to a binding jury verdict under Code § 8.01-188. That section addresses only the form in which an issue of fact may be submitted to a jury, and does not provide a party in a declaratory judgment suit a separate right to a binding jury verdict.

- 142 - We next consider the defendants' argument that the chancellor erred in entering judgment contrary to the jury verdict. A chancellor has discretionary authority under Code § 8.01-336(E) to impanel a jury to decide an issue out of chancery. The jury verdict is advisory or persuasive, and serves to inform the conscience of the chancellor. Bowers v. Westvaco Corp., 244 Va. 139, 147, 419 S.E.2d 661, 666 (1992). . . However, as we stated in DeJarnette v. Brooks Lumber Company, 199 Va. 18, 97 S.E.2d 750 (1957), when the chancellor has decided the case himself, despite the verdict of the jury and contrary to their findings, on appeal the duty devolves upon the appellate court to examine the evidence and if in its opinion the preponderance thereof is with the verdict the decree will be reversed and final judgment entered in accordance with the verdict. But where the evidence preponderates in support of the judgment of the chancellor his judgment will be upheld. Id. at 21, 97 S.E.2d at 752; see also Fitchette v. Cape Charles Bank, 146 Va. 715, 733, 133 S.E. 492, 494 (1926). . . We conclude that a preponderance of the evidence supports the chancellor's judgment that Rask willfully failed to cooperate with Atlantic by failing to attend the April 26, 1993 deposition. Atlantic had warned Rask of his obligation under the insurance policy to cooperate with McGavin. Moreover, McGavin had informed Rask that his failure to appear at a deposition could result in the entry of a against him. Despite these prior warnings, Rask intentionally refused to appear that afternoon, although the funeral for his friend's father had been held at 9:30 a.m. While Rask testified that he thought the deposition had been rescheduled, he did not attempt to contact McGavin to confirm that fact. He refused to return McGavin's calls, although he was aware that McGavin was trying to reach him to discuss the situation. Rask also admitted that he had not received any confirmation from McGavin that Atlantic had agreed to reschedule the deposition. Therefore, we conclude the chancellor did not err in entering judgment, contrary to the jury verdict, that Rask's willful failure to cooperate with Atlantic relieved Atlantic of any duty under its policy with Rask and Multicomm to indemnify Rask or Multicomm for the $ 2,000,000 judgment entered in favor of Angstadt against them. For these reasons, we will affirm the chancellor's judgment.

- 143 - H. The Nature of Equity

TILLER v. OWEN 243 Va. 176, 413 S.E.2d 51 (1992)

JUSTICE KEENAN delivered the opinion of the Court: Vivian L. Tiller appeals from a decree in which the trial court imposed a lien on her real property, which included a house, in favor of Ralph D. Owen. Tiller argues that the trial court erred in failing to find that the money Owen delivered to her for the down payment on the house was a gift, and in granting Owen a lien on the property. We conclude that under the evidence presented, the trial court erred in imposing a lien on Tiller's property. The evidence at trial showed that Tiller and Owen began dating in 1985. They started living together in October 1986. Two months later, their cohabitation was interrupted, but they continued to see each other on an occasional basis. In the summer of 1987, they resumed cohabitation and moved from Maryland to Bristol, where Tiller purchased the subject property. Owen was married during this entire period and did not obtain a divorce until 1990. Tiller was the sole purchaser named in the real estate contract, and she signed it in her own capacity. She made the loan application and obtained the loan herself. Further, she was the only party obligated on the note which secured the deed of trust on the property. Owen gave Tiller two checks totaling $ 23,000 for the down payment on the house. Tiller placed the checks in her personal bank account and wrote the check for the down payment out of this account. There is a factual dispute between the parties regarding Owen's intent at the time he delivered Tiller the checks. Owen testified that he provided Tiller with money for the down payment because he did not want to place the house in his name. He was still married, and he did not want his wife to obtain an interest in the property. Owen testified that he did not intend to make a gift of this size to Tiller. Instead, he testified that he thought they would eventually be married and that "she would have came [sic] in for as much of my property or as much of anything that I owned." Tiller testified that Owen gave her the money for the down payment so that she could have some security for the future in the event that "something happened" to him. At Owen's request, she had stopped working and had no social security benefits available to her. Owen provided Tiller with sufficient money to make each of the mortgage payments from October 1987 until June 1989. When their relationship ended in June 1989, Tiller moved out of the house after Owen refused to leave. From that time until the day of trial, Owen remained in possession of the premises and made the mortgage payments directly, rather than giving Tiller the funds for that purpose.

- 144 - In his bill of complaint, Owen requested that the trial court declare a resulting trust on the property in his favor. He asserted that the trust arose from his delivery of money to Tiller for the down payment on the house, as well as from the money he had extended her to make the monthly mortgage payments. Upon hearing the evidence, the trial court ruled that Owen was entitled to a lien on the property in the amount of $ 19,315. This amount represented the total sum of the down payment, minus $ 3,685, which the court found was due Tiller based on four I.O.U.s written her by Owen. The court entered its final decree on November 15, 1990. On December 6, 1990, the trial court modified the decree, increasing prospectively the amount of Owen's lien by any money that he thereafter paid on the mortgage exceeding $ 400 per month, so long as he resided on the premises or used the premises. In its remarks from the bench after the testimony was completed, the trial court did not state the basis on which its relief was premised. Instead, the court stated only that it was "of the opinion there is no adequate remedy at law in this case and . . . [this] is one of the cases where equity sometimes has to fashion its own remedy." In the final decree, the trial court again failed to specify its basis for granting Owen this relief. Instead, the decree simply stated: "It appearing to the court from the pleadings, the evidence and the equities in this case that the plaintiff, Ralph D. Owen[,] should have a lien against the property of Vivian L. Tiller . . . it is [therefore] adjudged, ordered and decreed that the plaintiff, Ralph D. Owen, is hereby awarded a lien against the property of Vivian L. Tiller . . . which lien, if not sooner paid, may be enforced after July 1, 1991, in the manner provided by law." We agree with Tiller that the trial court erred in granting Owen a lien against the property. Throughout the proceedings, Owen based his request for relief on his claim that a resulting trust had arisen in his favor. However, the trial court did not find that such a trust existed. Instead, it simply ruled that imposition of a lien was appropriate. We find that, under the evidence presented, this constituted reversible error. A trial court must have a cognizable basis for granting equitable relief. Equity is a complex system of established law and is not merely a reflection of the chancellor's sense of what is just or appropriate. Price v. Price, 122 W.Va. 122, 124, 7 S.E.2d 510, 511 (1940). Further, equitable relief may not be granted where the complainant has failed to produce sufficient evidence in support of his . Here, we find that as a matter of law a resulting trust did not arise. A resulting trust is an indirect trust which arises from the intention of the parties, or the nature of the transaction. It is not dependent on any express declaration of trust. Salver v. Salver, 216 Va. 521, 525, 219 S.E.2d 889, 893 (1975). In order for a resulting trust to arise, the would-be beneficiary must pay for the property, or assume payment of all or part of the purchase money prior to or at the time of purchase, and have legal title conveyed to another without any mention of a trust in the conveyance. Leonard v. Counts, 221 Va. 582, 588, 272 S.E.2d 190, 194 (1980). In addition, he must have paid the purchase money as his own, and not as an agent of the title holder, nor as a loan to the latter. Salyer, 216 Va. at 526, 219 S.E.2d at 893. Finally, in instances where the would-be beneficiary has obligated himself to pay purchase money prior to or at the time of purchase, he must have upheld this commitment. Leonard, 221 Va. at 588, 272 S.E.2d at 194-95.

- 145 - In the case presented here, Owen did not obligate himself to purchase all or part of the property in question. He did not sign the sales contract or become obligated on the mortgage. Further, he signed no other documents binding him to pay all or part of the purchase money. Thus, when he delivered the checks to Tiller, both for the down payment and the monthly mortgage payments, it was not done in satisfaction of any obligation he had with regard to the purchase of the property. For this reason, as a matter of law, a resulting trust did not arise. See id. Since the trial court stated no basis for imposing the lien other than finding it "appropriate" to be done, and since the evidence does not establish a cognizable claim supporting the trial court's action, we will reverse the judgment of the trial court and dismiss Owen's bill of complaint.

Notes on Equitable Matters

Still Applicable in 2006 and Beyond. Is there any question that the view of equity set forth in Tiller v. Owen is still applicable? Surely nothing in the simplification of pleading and procedure to allow all claims to be brought in a single case enlarges lien rights, for example, or changes the standards for when a constructive trust may be imposed. There is, as this case illustrates, a substantive “law” of equity, in which decades of case decisions establish precedent for when equitable forms of relief will be available. Is it clear that no unification of pleading standards could possibly alter the need to satisfy those established standards? For example, if “irreparable harm” must be shown to obtain an injunction, how could a simplified law and equity pleading regime be viewed as altering that requirement? Displacement of the "common law." It is said that English common-law doctrines are recognized in Virginia where no local law exists on a point. However, where common law principles are repugnant to the nature and character of the political system, or where different and varied circumstances obtain, the common law notions are rendered inapplicable, are not in force here, or must be so modified in their application as to adapt to the policies of the Commonwealth. See Weishaupt v. Commonwealth, 227 Va. 389, 315 S.E.2d 847 (1984)(rejecting the English common- law rule which exempted a husband from charges of raping his wife based on a doctrine of a wife's unrevokable implied consent to marital intercourse). Declaratory Judgment actions. One of the most frightening aspects of the pre- 2006 litigation landscape in Virginia was the task of determining on which side of court an action for declaratory relief be filed. In an action seeking $758,166 the plaintiff got it wrong. The answer pre-2006 was: it depends (!). In Dulles Corner Properties v. Smith, 246 Va. 153 (1993), the Supreme Court noted that declaratory relief may take several forms. Some declaratory judgment actions may be brought at law. However, where the relief is comparable to equitable remedies, such as reformation or injunction, the case must be filed on the equity side. And, if there are other claims pending at law, a separate declaratory judgment action must be filed if the relief looks equitable. It seems clear that the creation of a single format for civil actions means that a declaratory

- 146 - judgment application is always in the right “place” and thus it can be considered on the merits, whether it amounts to a simple “statement” of what the parties’ rights are or even if it “reforms” their agreements under equitable powers. Equitable indemnification. In Carr v. The Home Insurance Company, 250 Va. 427, 463 S.E.2d 457 (1995), the Court held that equitable indemnification is available when a party who is without personal fault is legally liable for damages caused by the negligence of another; equitable principles allow the innocent party to recover from the negligent actor the amounts paid to discharge the liability. The Court noted, however, that a prerequisite to recovery based on equitable indemnification is a determination that the negligence of another person caused the damage because, without that determination, neither the negligent actor nor the innocent party can be held liable for the damages claimed. In the accident context of the case before it, there had been no determination that the driver of the other car was negligent or that her negligence caused the damages claimed, and thus the elements necessary to support equitable indemnification in favor of the insurer were not met. On these facts, the only cognizable cause of action available to the insurer was subrogation, and the insurer did not bring its action seeking recovery from the defendant within the two-year statute of limitations period for personal injury actions. The trial court thus erred in denying the defendant's plea of the statute of limitations.

- 147 - I. Recommendations of a Commissioner

A “commissioner in chancery” is an attorney in private practice, who is appointed by a local judge to assist with respect to a particular pending case. When a case is “referred” to a commissioner, the parties will “appear” before that attorney, usually in a law office, and submit proof, file briefs, make oral arguments and otherwise treat this attorney as the designated “judge” of their proceeding. The parties must pay for the services of the commissioner – the taxpayers do not provide funding. Commissioners may only be used in cases where the claim is equitable – and hence there is no jury right. The commissioner prepares factual findings on whatever the case issues involve, and submits a recommended disposition to the presiding judge. The parties have a right to submit comments and objections to any part of the commissioner’s recommendation, and the circuit court judge must then rule (adopting, rejecting or modifying the disposition recommended by the commissioner). This system works because it saves time for circuit court judges, and in some jurisdictions it is used more than in others. Some skeptics suggest that “obnoxious cases” such as bickering divorcing spouses, are routinely sent to a commissioner in some circuits of the Virginia, to protect the circuit court judge from becoming embroiled in unpleasant, unruly or protracted disputes that may consume more time than is warranted. Other observers suggest that most litigants would find that a divorce is the most emotionally charged circumstance they ever will face, and it is perhaps the only time the citizen will be in court. To have the case heard and, for many practical purposes, “decided” by an attorney who must be paid an extra fee to consider the matter is demeaning to the citizen’s rights and interests. The role of the commissioner is authorized by statute and a major study in 2004 and 2005 led to revisions in the governing Code provisions, but not to abolition of the practice of using commissioners. While there is now only one form of civil action, commissioners may only be appointed in cases where the cause of action is equitable in nature. The Orgain case below explores the process of commissioner reports and the standards by which they are to be reviewed by the circuit court judge. Ask yourself whether – under the standards articulated here – the judge who appoints a commissioner is giving up more of the decision making power than might at first be thought.

- 148 - ORGAIN v. BUTLER 255 Va. 129, 496 S.E.2d 433 (1998)

JUSTICE KEENAN delivered the opinion of the Court: In this appeal from a decree of sale entered in a partition suit, we consider whether the chancellor abused his discretion in ordering the property sold at public auction, rather than through a real estate broker as recommended by the commissioner in chancery. John Barbour Orgain, III, and Norvell Orgain Butler are siblings who own as tenants in common a 40-acre tract of land located in Chesterfield County (the property). Butler filed a bill of complaint seeking partition or sale of the property, and the chancellor referred the case to a commissioner in chancery. Based on an appraisal received in evidence, the commissioner determined that the fair market value of the property is $ 803,000. The commissioner also found that the property is unique in nature because it is one of the last large undeveloped parcels on Huguenot Road in Chesterfield County. The commissioner noted that neither party had offered to purchase the other party's interest in the property. Orgain and Butler rejected two private offers to purchase the property. One offer was in the amount of the appraised value. The other offer, in the amount of $ 1,200,000, was acceptable to Butler but was rejected by Orgain because of certain attached conditions. After reviewing all the evidence, the commissioner filed a report recommending "that since the property . . . is unique in . . . nature, it should be publicly marketed through a reputable commercial real estate brokerage firm agreed to by the parties." Neither party filed exceptions to the commissioner's report. The record does not show that any evidence was taken before the chancellor. After the chancellor heard argument of counsel concerning the commissioner's report, he rejected the commissioner's recommendation that the property be sold privately. The chancellor noted that the parties already had refused two private offers, and he ruled that a public auction was "the only alternative," due to the "likelihood that the parties will be unable to agree upon any price or method for conducting a private sale." On appeal, Orgain argues that there was no evidence to support the chancellor's conclusion that the parties could not agree on the method and terms for a private sale of the property. Orgain further contends that the chancellor improperly rejected the commissioner's report, since the chancellor did not find that the report was unsupported by the evidence. Finally, Orgain asserts that the chancellor's ruling is contrary to the parties' best interests. In response, Butler argues that the chancellor did not abuse his discretion in ordering the property sold at public auction. Butler contends that the commissioner's recommendation was merely advisory and that once the chancellor concluded that an agreement between the parties was unlikely, "it was absolutely within the [chancellor's] discretion to order the public sale." We disagree with Butler's arguments. Although the report of a commissioner in chancery does not carry the weight of a jury verdict, Code §8.01-610, the report should be sustained unless the chancellor concludes that the commissioner's findings are not supported by the evidence. Yeskolski v. Crosby, 253 Va. 148, 152, 480 S.E.2d 474, 476 (1997); Hill v. Hill, 227 Va. 569,

- 149 - 576-77, 318 S.E.2d 292, 296 (1984). This rule applies with particular force to findings of fact that are based on evidence taken in the commissioner's presence, but does not apply to pure conclusions of law contained in the commissioner's report. Morris v. United Virginia Bank, 237 Va. 331, 337-38, 377 S.E.2d 611, 614 (1989). Code §8.01-610 gives the chancellor substantial discretion in the manner of reviewing the commissioner's report. While the recommendations of the commissioner are merely advisory, Hill, 227 Va. at 579, 318 S.E.2d at 298, the statute does not allow the chancellor to ignore the commissioner's report or portions thereof. Gulfstream Bldg. Assocs. v. Britt, 239 Va. 178, 185, 387 S.E.2d 488, 492 (1990). The chancellor is required to consider the commissioner's factual findings. See id.; Yeskolski, 253 Va. at 152-53, 480 S.E.2d at 476; Hill, 227 Va. at 576-77, 318 S.E.2d at 296. When the chancellor has disapproved the commissioner's findings, we must review the evidence and determine whether, under a correct application of the law, the evidence supports the commissioner's findings or the conclusions of the chancellor. See Firebaugh v. Hanback, 247 Va. 519, 525, 443 S.E.2d 134, 137 (1994); Morris, 237 Va. at 338, 377 S.E.2d at 614. In a partition suit, when partition of the subject property cannot be conveniently made, the chancellor may order a sale of the entire property if such sale will promote the interests of the parties who are entitled to the subject property or its proceeds. Code §8.01-83; Shannon v. Hall, 235 Va. 360, 364, 368 S.E.2d 695, 698 (1988). A sale of property in a partition proceeding must be made in a manner that will bring the best price obtainable. Austin v. Dobbins, 219 Va. 930, 934, 252 S.E.2d 588, 591 (1979). Thus, in the present case, the chancellor was required to order such method of sale as would obtain the highest price for the property, unless the evidence showed that the parties' conduct or other circumstances made use of that method unachievable. The commissioner's recommendation, that the highest price for the property could only be obtained through public marketing by a real estate broker, was based entirely on his factual finding that the property was unique in nature because of its size and location. The record does not show that the chancellor considered this factual finding. Moreover, the record contains no evidence to support the chancellor's conclusion that the parties likely would be "unable to agree on any price or method for conducting a private sale." The record shows only that the chancellor assumed that the parties would be unable to agree on the method and terms of a private sale because they had not reached an agreement on any other matter during the course of the proceedings. The chancellor reached this conclusion despite his acknowledgement that the method of sale recommended by the commissioner would be the most advantageous to the parties. Thus, the chancellor abused his discretion because he ordered a sale at public auction in the absence of any evidence that the parties' interests would be promoted by this method of sale, or that the parties were unable to agree on terms for listing the property through a licensed real estate broker. Since the evidence does not support the chancellor's conclusions, we will reverse the chancellor's decree, enter final judgment here confirming the commissioner's report, and remand the case to the chancellor for further proceedings.

- 150 - Notes on Commissioners in Chancery

Role of “Commissioners in Chancery” in 2006 and Beyond. The Judicial Council of Virginia has long held concerns about various issues related to the use of Commissioners in Chancery, their effect on litigants, and the advisability of limiting and/or abolishing their use in domestic relations cases. In 2004, about 10.9% of divorces and 4.5% of other equity cases concluded in the Circuit Courts of Virginia were handled by Commissioners. Eight of the 31 judicial circuits showed significant use of Commissioners to conclude divorce cases. These circuits were all in the Tidewater area or northern Virginia. The use of Commissioners in handling other equity cases was geographically more widespread. The Judicial Council began a study of these issues during 2003 and reviewed recommendations adopted by the Boyd Graves Conference related to the use of Commissioners in Chancery in Virginia. Upon deliberation, the Council decided that it would be appropriate to ask judges, lawyers, and Commissioners in Chancery from across the state for their input relating to the use of Commissioners in general and to these recommendations in particular. In early 2004, surveys were sent to these groups and many responses to the survey were received and reviewed. With the input from judges, lawyers, and Commissioners in Chancery, the Judicial Council recommended to the Supreme Court of Virginia changes to the Rules of Court necessary to implement sweeping recommendations limiting the use of Commissioners. The Council recommended statutory changes to limit the use of Commissioners as follows: (1) the use of Commissioners in Chancery would not be permitted in uncontested divorce cases; and (2) in all the other cases, Commissioners in Chancery would be permitted only by agreement of the parties with the concurrence of the court; or (3) upon motion of a party or the court on its own motion with a finding of good cause shown in each individual case.

STUDY AND AMENDMENT ON THE USE OF COMMISSIONERS IN CHANCERY Types of Cases Referred to Commissioners in Chancery Among the responses to the Commissioners in Chancery Survey undertaken by the Judicial Council, there was general consensus among judges, Commissioners, and attorneys about the types of cases routinely referred to Commissioners. A majority (62.4%) indicated that all issues related to divorce are referred (judges=57.9%, Commissioners=61.4%, and attorneys=80.8%). When asked whether cases with particular issues were referred to Commissioners, only 26.0% of respondents said contested divorce cases were referred; 38.8% uncontested divorce cases, 28.1% custody and visitation matters; 14.0% spousal/child abuse cases; and 16.5% equitable distribution cases. The overall percentage of responses for real estate cases referred were: 36.4% mechanics liens, 41.7% boundary disputes, and 45.0% partition suits. Other cases referred included 76.0% will/trusts/estates, 24.4% contract disputes, and 12.8% personal

- 151 - injury. Other matters such as tax suits and debtors' interrogatories were cited as also being referred to Commissioners. Rules and Training The survey asked whether there were prescribed rules, guidelines or standards for Commissioners in their jurisdictions. Two-thirds of respondents indicated there were not. Among judges, 6.6% indicated that Commissioners are required to attend specialized training; 5.7% of Commissioners responded similarly. 53.8% of attorneys indicated that specialized training should be required. Attorneys suggested that general CLE courses, training in procedures, as well as specialized training should be required. Commissioners indicated in written responses that annual training for Commissioners should be provided by the Supreme Court of Virginia; CLE classes and general "update" meetings were also mentioned as desirable. When asked if Commissioners have specialized qualifications to hear the issues referred to them, 77.6% of judges and 51.4% of Commissioners indicated that they do, and 69.2% of attorneys indicated that they should. Together, 61.6% of respondents thought specialized qualifications were, therefore, important. Judges' in their written comments regarding Commissioners' qualifications generally indicated that Commissioners are capable, well-trained, highly experienced attorneys who tend to be senior members of the bar, are ethical and competent and have expertise in a particular area of law. Commissioners and attorneys also stressed expertise in related areas of the law and minimum years of practice. Fee Schedules The survey asked whether or not there was a prescribed fee schedule for Commissioners in Chancery. 28.9% of judges and 20.7% of Commissioners answered that there was a fee schedule. 30.8% of attorneys indicated they were aware of court prescribed fee schedules in the courts where they practice; 3.8% said they were aware of fee schedules published by Commissioners in Chancery. Case Processing Issues The majority of respondents (69.4%) indicated that cases referred to Commissioners in Chancery do not take longer to disposition than nonreferred cases. Of the 60 who answered yes to this question, 17 indicated that referred cases take up to 90 days longer while four said referred cases take at least 180 days more. Nearly three quarters (74.4%) of respondents said referred cases do not require more hearings than non-referred cases. Of those that indicated that referred cases do require more hearings, 60.0% estimated that only one additional hearing was needed. Overwhelmingly (80.2%), those that returned surveys indicated that cases referred to Commissioners receive the same uniformity of treatment as those cases heard only by the court. (Judges 85.5%, Commissioners 80.0%, and attorneys 61.5%). Judges and attorneys were asked to evaluate whether of not from their perspectives cases referred to Commissioners in Chancery are more difficult to manage than a case not referred. 40.8% of judges indicated that there was no difference between referred and non-referred cases; 28.9% said referred cases were less difficult to manage. For attorneys, 46.2% said there was no difference between cases while 26.9% said that

- 152 - referred cases were more difficult to manage and an identical percentage (26.9%) said that referred cases were less difficult to manage. Commissioners were asked to identify particular problems which occur in the referral process that affect the management of a case. Common responses to this question included comments about conflicts of interest, lack of appointment schedules, and the difficulties in scheduling multiple parties. Commissioners also described the time it takes to receive needed reports and to get paid as being too long. Expense to Litigants Just over 92% (92.1%) of judges, 73.6% of Commissioners, and 80.8% of attorneys indicated that litigants incur additional expenses when a case in referred to a Commissioner as compared to a similar case that is not referred. This is an overall response of 80.2%. A somewhat lower percentage of respondents (44.2%) said this additional expense was "significant," defined as over $1,000. Pro Se Litigants Among respondents, 43.4% of judges and 55.0% of Commissioners indicated that cases are referred to Commissioners in Chancery when a pro se litigant is involved. Of the 41 judges who responded to the question, 87.8% (or 36 judges) indicated that they believe no undue hardships are placed on pro se litigants when their cases are referred to Commissioners. 75.0% of judges also responded that the use of Commissioners does not limit access to the courts for pro se litigants. Commissioners were asked to describe what problems are caused when a pro se litigant is referred. Many Commissioners responded to this question. They generally agreed that pro se litigants do not understand the process so education on procedural and evidentiary matters is necessary. Cases tend to take longer and the Commissioner must do more work when pro se litigants are involved. Some Commissioners wrote that the problems they encounter with self-represented litigants are little different from those they experience trying a case in front of the Court. About Commissioners Judges were asked to describe complaints they receive from lawyers and litigants about Commissioners. The common themes of these complaints involved costs and delays but only 19.7% of judges indicated that they received such complaints. 10.0% of Commissioners said they receive complaints. Cost and delay characterize most of these as well. Interestingly, 38.5% of attorneys indicated they receive complaints about Commissioners from their clients. Consequences of Abolishing Commissioners in Chancery Judges, Commissioners, and attorneys were asked to describe the consequences that would attend abolishment of Commissioners in Chancery. Many judges wrote of the increase in court caseloads that would result if Commissioners were no longer available and the corresponding increase in court delay. One Judge’s Response: "Additional court sessions would have to be scheduled for an already overcrowded docket. These cases would be delayed because of the multiple trial dates they require." Judge: "Dockets would become congested immediately accelerating the need for an additional judge. Access to the court by litigants would be delayed."

- 153 - Commissioners and attorneys generally shared the opinion of judges about the consequences for the court if Commissioners were abolished: increased caseload, delay, and additional burdens on judges. Commissioner: "A long delay in setting a hearing for a contested divorce case because the judges do not have time to hear the equitable distribution issues." Commissioner: "Court dockets would explode. We are a rural jurisdiction and most courts only meet once or twice a week. Litigants tend to request one full day or more for trial." An Attorney’s Response: "Heavier court dockets-unnecessary lengthening of court hearings; suppression of chance for case to be settled. Higher attorney fees to litigants." Attorneys were asked to describe the objections and benefits to the use of Commissioners in Chancery. Again, costs to litigants and increased delay were common themes of attorneys' written responses. As for benefits, attorneys stated that use of Commissioners frees up court time and allows concentrated focus on cases in a less formal and adversarial environment which increases the chances of settlement. Some attorneys, however, saw no benefits to the use of Commissioners.

BASIC CHANGE ENACTED IN 2005 In the end, Commissioners were not abolished. Instead, a highly restrictive statute was passed limiting their use. Thereafter, the Rules of Court were amended to follow the statute. After a lengthy blue-ribbon study of the use of Commissioners in Chancery in Virginia, described above, the Judicial Conference sponsored, and the General Assembly enacted, legislation significantly restricting use of commissioners in 2005. The revision of Code § 8.01-607 (B) results in a provision that commissioners in chancery may be appointed in cases in circuit court, including uncontested divorce cases, only when: (1) There is agreement by the parties with the concurrence of the court; or (2) Upon (i) motion of a party, or (ii) upon motion of the court, sua sponte. The same section requires that court must make a finding of good cause shown in each individual case, thus obviating the possibility of a standing order referring classes of cases to a commissioner. The revised commissioner in chancery statute reads: § 8.01-607. Appointment and removal A. Each circuit court may, from time to time, appoint such commissioners in chancery as may be deemed necessary for the convenient dispatch of the business of such court. Such commissioners shall be removable at pleasure. B. Commissioners in chancery may be appointed in cases in circuit court, including uncontested divorce cases, only when: 1. There is agreement by the parties with the concurrence of the court; or 2. Upon (i) motion of a party, or (ii) upon motion of the court, sua sponte. The court shall make Ega finding of good cause shown in each individual case.

- 154 - Implementation in Rules of Court. The court Rule implementing this statute as of January 1, 2006, reads as follows:

Rule 3:23. Use of and Proceedings Before a Commissioner in Chancery. (a) Commissioners in chancery may be appointed in cases in circuit court, including uncontested divorce cases, only when (1) there is agreement by the parties with concurrence of the court or (2) upon motion of a party or the court on its own motion with a finding of good cause shown in each individual case. (b) Upon entry of a decree by the court referring any matter to a commissioner in chancery, the clerk shall mail or deliver to the commissioner a copy of the decree of reference. Unless the decree prescribes otherwise, the commissioner shall promptly set a time and place for the first meeting of the parties or their attorneys, and shall notify the parties or their attorneys of the time and place so set. It shall be the duty of the commissioner to proceed with all reasonable diligence to execute the decree of reference. (c) A commissioner may require the production of evidence upon all matters embraced in the decree of reference including the production of all books, papers, vouchers, documents and writings applicable thereto. The commissioner shall have the authority to call witnesses or the parties to the action to testify and may examine them upon oath. The commissioner may rule upon the admissibility of evidence unless otherwise directed by the decree of reference; but when a party so requests, the commissioner shall cause a record to be made of all proffered evidence which is excluded by the commissioner as inadmissible. (d) The commissioner shall prepare a report stating his findings of fact and conclusions of law with respect to the matters submitted by the decree of reference. The commissioner shall file the report, together with all exhibits admitted in evidence and a transcript of the proceedings and of the testimony, with the clerk of the court. The commissioner shall mail or deliver to counsel of record and to parties not represented by counsel, using the last address shown in the record, written notice of the filing of the report. Provided, however, that in divorce cases a copy of the report shall accompany the notice. Provided, further, that no such notice or copy shall be given parties who have not appeared in the proceeding. ______

Key Change. Neither the statute nor the rule defines “good cause” for appointment of a commissioner, but the thrust of these provisions seems inescapable: the use of a commissioner should only be where there is consent or some unusual circumstance. As we enter practice in the year 2006 and beyond, use of the commissioner process is not expected to be "the norm," nor is it even encouraged. The key 2005 revision is found in subsection (a) of the Rule. While it applies to all uses of the commissioner appointment process, from sales of land and partition cases to wills cases, the rule singles out and targets the most common use of commissioners in chancery appointed in cases in circuit court, which involves the collection and assessment of the evidence in uncontested divorce cases. In all subject matters, the

- 155 - revised rule only when (1) there is agreement by the parties with concurrence of the court or (2) upon motion of a party or the court on its own motion with a finding of good cause shown in each individual case. Under the amended rule even party consent is not automatically sufficient to assure that a commissioner in chancery will be appointed. Even in such cases the trial court must approve and make the referral to a commissioner. And in other cases, where the court considers the appointment to be a convenience or an affirmative benefit, either on its own motion or the application of a party, it must find good cause. Indeed, the current Rule requires that good cause be found in "each individual case." This provision is clearly intended to stop the practice – which only certain circuits of the Commonwealth have used – of routinely referring all cases in a particular category (usually, but not always, divorce) to a commissioner. Under the new regime, reasons for doing so must be located in each case as it arises. The Rule, however, stops short of demanding that the circuit judge enter an order expressly articulating the factors establishing "good cause" in each specific case.

______

- 156 -

J. Summary: 17 Propositions About Law & Equity in Virginia

RELIEF AT LAW AND IN EQUITY 1. Generally legal relief is in the form of dollar damages, while in equitable claims the court may award one or more forms of equitable relief, in addition to the possibility of also awarding dollar damages. 2. If the subject is breach of contract, a plaintiff may elect to seek relief in the form of dollar damages for breach, equitable relief (such as an order of specific performance compelling a party to complete performance on the contract), or both equitable relief and damages. Formerly, if plaintiff wanted to obtain any form of equitable relief as part of the contract suit, that lawsuit was filed in equity and plaintiff gave up a jury trial right in order to be assured of the necessary forms of relief. However, beginning in 2006, the contract plaintiff will be afforded a jury hearing on the damage claim while the judge will continue to be responsible for determining whether the evidence satisfies the tests required in order to award equitable remedies. 3. The 2006 reforms in law and equity pleading also have impact on the litigation of tort suits. In the new unified pleading system, a plaintiff will be able to plead the normal legal claim for tort damages and also to pursue injunctive or other forms of equitable relief if the tortious conduct is repetitive or otherwise qualifies for the imposition of equitable remedies. In a case for conversion of property, for example, the plaintiff could recover damages and ask the court to impose a constructive trust on the defendant’s assets as part of the same proceeding.

PRELIMINARY NOTES ON RES JUDICATA and COLLATERAL ESTOPPEL 4. Prior to July of 2006, res judicata concerns did not require a plaintiff to bring legal claims for damages in the same suit in which equitable relief is sought arising from the same transaction – since both forms of relief may now be sought in a single form of civil action, there seems no justification for allowing separate suits arising from the same factual matrix in the future in Virginia. 5. Multiple suits on the same legal theory are barred, at least where the claims raised in the second or subsequent action entail the same legal elements, are brought for the same forms of relief, at least where they were "ripe" at the time of the earlier court action. (E.g., Jones and sequential suits at law for debt on the same loan). [There is one exception to this in Virginia law, which we will see in Chapter 15, but the general proposition is broadly applicable]. 6. Without having read all the res judicata cases to be found in Chapter 15 a preliminary hypothesis is that, in Virginia law enters 2007, a determination of the essence of a claim is controlled more by the basic injury or wrong than in prior eras: the identity of the underlying facts or transaction being litigated determines whether a subsequent action is duplicative and thus barred. 7. In any second or subsequent litigation between the same parties, the doctrine of collateral estoppel may apply to establish specific factual issues (such as, what color

- 157 - was the light?), or fact/law issues (such as contributory negligence), if those matters were actually litigated and necessarily decided in the earlier legal proceeding. Thus, though Virginia collateral estoppel doctrine has several features we need to look at in Chapter 15, one should start with the basic premise that even if the cause of action is not barred by res judicata, the outcome of a subsequent suit may be affected (perhaps even fore-ordained) if the elements for decision in a prior action caused a judge or jury to make a specific finding on one or more issues that also control the later case.

CHANGING "SIDES" OF COURT 8. A plaintiff cannot, as of 2006, possibly goof up by filing suit on the "wrong" side of court (regardless of the relief sought or the nature of the cause of action pled). There will never be an instance where the action must be “transferred” to the correct docket. Code § 8.01-270 is abrogated. 9. If a plaintiff brings a claim for damages based on all available information, but learns in preparations of additional equitable relief that appears warranted, plaintiff may seek leave of court to amend the pleading to assert the additional claims. No separate proceeding is required. 10. If a plaintiff files suit on a legal claim, a defendant who pleads an equitable counterclaim seeking some affirmative equitable relief will not need to request any transfer or change of the proceeding. The original plaintiff’s jury trial demand will not be affected by the request for equitable relief, except in the unusual case where the defendant obtains summary judgment on the counterclaim mooting or obviating the need for further proceedings on the plaintiff’s claim, or where the court grants a severance of the action and proceeds to try the equitable claim by defendant first as a bench trial. In those instances, the prior resolution of the defendant’s equitable claim could obviate the plaintiff’s case in some circumstances. 11. In any civil case, a defendant with a claim for equitable relief arising from the transaction may file a separate lawsuit. It is not clear whether in that separate proceeding the court could be asked to enjoin prosecution of the other pending litigation. That result would be untoward, but is not addressed in the 2005-2006 reforms overtly. Prior to 2006, when two separate civil actions were pending it was almost unheard of to have one purport to enjoin the other, so it is anticipated that this will not happen under the unified pleading system now in effect. 12. If it is possible to “consolidate” actions in Virginia’s circuit court, despite the absence of any statute or rule specifying this procedure. There was precedent prior to 2006 for purported “consolidation” of separate law and equity proceedings, and it seems certain that with a single form of civil action consolidation will remain a viable option for coordinating multiple lawsuits arising out of the same transaction or occurrence.

- 158 - JURY TRIAL 13. Actions that were at law generally carry a jury trial right, if demanded by a party. In federal practice there are many decisions focusing on whether a jury trial was regularly afforded for particular categories of claims at the time the Constitution was being ratified in the late 1780's. Virginia’s Supreme Court has not engaged in this exercise, but does apply the essential historical test: whether the particular sort of claim involved is one that was traditionally given a jury in Virginia. Thus, tort cases have from time immemorial been heard by a jury if the plaintiff wishes one, and divorce (to pick an opposite example) is not heard by juries in any instance. 14. Suits in equity carry no jury trial right, generally. Thus suits to partition real property, wills and trusts matters, domestic relations, and general equitable claims for injunctions, specific performance and other species of equitable relief do not invoke a constitutional jury trial right in Virginia. 15. In any suit in on one of the traditionally equitable causes of action, the judge may elect to empanel an advisory jury [formerly an "issue out of chancery", § 8.01- 336(E)], the verdict of which is not binding but merely informs the conscience of the court. It may be that in order for this procedure to be properly available the trial judge must find [in advance?] that the evidence on the point to be submitted to this jury is in great conflict and of nearly even weight. [See Nelms]. 16. Where the pending claim is equitable in nature (hence there is no traditionally recognized jury trial right for that category of claim) nonetheless if the defendant (or plaintiff in responding to a counter-claim for affirmative relief) makes a "plea in equity", setting forth a single, dispositive state of facts disposing of potential liability, there is a statutory right to a jury on that plea [§ 8.01-336(D)], if demanded by either side. It does not appear that the plaintiff (or defendant in asserting a counter-claim) can be deemed to have set up a plea warranting a jury in equity; it must be a defensive plea. 17. If there are both legal and equitable claims in a single lawsuit (the former carrying a jury trial right and the latter being bench issues) the trial judge should seat and instruct a jury to determine the legal issues, and the judge should decide the equitable claims for which no jury trial right applies. Where there are common factual elements, the prevailing approach nationally is to have the jury decide the common questions, such that the judge is bound by the jury’s fact finding on any issue necessary to the legal claims, and must apply that fact determination in ruling on equitable relief. A rule to embody this principle is pending.

- 159 -

K. The Power of a Court Ruling on an Equitable Claim to Order All Necessary Relief

In Advanced Marine Enterprises v. PRC Inc., 256 Va. 106, 501 S.E.2d 148 (1998) the Supreme Court dealt with a large number of issues concerning the power of a court when ruling on an equitable claim. The defendant government contractor made secret deals with plaintiff’s employees, who resigned en masse to go to work for defendant, taking proprietary information with them. Plaintiff sued for 1) breach of fiduciary duty (Count I); 2) intentional interference with contractual relations (Count II); 3) intentional interference with prospective business and contractual relations (Count III); 4) specific performance and breach of the Employment Agreement (Count IV); and 5) violation of Code § 18.2-499 (Count VII). After hearing evidence Judge Paul Sheridan commented: "I think the method by which the [PRC Managers] elected to do this was covert, surreptitious, violated civil duties, [and] was absolutely wrong." During post-trial hearings, the chancellor stated that "the total impact of this thing was outrageous. This was a group wrong, and they were intending to disadvantage their employer while sitting there silent setting up their own employer for the benefit of themselves and the benefit of AME." In a long opinion that is worth study on any of the issues addressed, there were several points about the relationship of legal and equitable relief, made at a time several years before the single-side-of-court reform was implemented in 2006. The trial judge, sitting as the chancellor, awarded $ 1,245,062 in compensatory damages on each of Counts I, II, III, and VII. Although this amount was awarded on each of these four Counts, the chancellor did not aggregate these amounts but entered a single compensatory damage award of $ 1,245,062. Under Code § 18.2-500, the chancellor then trebled the $ 1,245,062 compensatory damage award entered on Count VII. Thus, the total amount of non-punitive damages awarded was $ 3,735,186. The chancellor awarded punitive damages in the amount of $ 1,000,000 against AME, noting that he might be required to reduce that amount to $ 350,000 under Code § 8.01-38.1. He also awarded varying amounts of punitive damages against certain PRC Managers and employees Punitive and Treble Damages. In response to the defendant’s argument that in ruling on an equitable cause of action the trial court cannot award punitive damages because any award of damages in equity is limited to compensating an injured party to make it "whole," the Supreme Court stated that when ruling on an equitable claim may also hear legal claims and enforce legal rights by applying remedies that would otherwise be available only at law. Since punitive damages were available under some of the counts of a multi-count pleading, the award of this relief was proper. The Court also ruled that it was not a mistake for the trial judge to award both punitive damages and treble damages. The state’s conspiracy statutes include Code § 18.2-500(a) which authorizes award of treble damages upon proof of the cause of action provided under Code § 18.2-499. Since the awards of punitive and treble damages were made under separate counts of the complaint, the Court found that they involved “different legal duties and injuries.” In this particular case, the chancellor awarded

- 160 - punitive damages under Counts I, II, and III, for breach of fiduciary duty, intentional interference with contractual relations, and intentional interference with prospective business and contractual relations. The award of treble damages was limited to the business conspiracy claim of Count VII. The Court noted that to prevail in its business conspiracy claim, plaintiff was required to prove that the defendants combined, associated, agreed, or acted in concert together for the purpose of willfully and maliciously injuring plaintiff in its business "by any means whatever." Code § 18.2-499. In contrast, the claims asserted in Counts I through III do not require such proof and relate solely to defendant’s interference with the employment relationship between plaintiff and its managers and employees. Thus, even though the mass hiring episode was arguably a single “event,” the Court ruled that the different elements made the recovery of both punitive and treble damages permissible. Punitive Damage Cap – Not Applied to Treble Damages(!) The Supreme Court also found that an award of treble damages is not subject to the ceiling on punitive damages set forth in Code § 8.01-38.1. Under the “plain language” of Code § 8.01-38.1, the limitation of $ 350,000 applies only to an award of "punitive" damages.

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Hypotheticals

1. P contracted with D for exclusive rights to market D's products in the Commonwealth. When D begins selling the same products through other channels in the area, P files an action for damages arising from this breach of contract and, in a second count, seeks an injunction barring further sales except through him. Pre-2006 D could challenge the propriety of plaintiff's combined applications for relief in the suit at law. Today is there any defect in P’s complaint?

2. Assume that on the same facts, P files only a claim for damages at law on the contract. D wishes to obtain reformation of the agreement to permit it to sell to others besides P. D drafts a pleading setting forth the reasons why it is appropriate for reformation to be granted by the court. Is there any procedural problem today if D files this pleading as a counterclaim in P's suit? Is there any bar to D filing it as her own complaint in a separate action for the equitable relief of reformation?

3. On the same facts, what if P does not care about a jury, and so files a two-count pleading seeking damages for breach of contract and an injunction. If D demands a jury trial, how and where would she do so, and what result is likely?

- 162 -

Chapter 4

Parties and Claims

A. Aggrieved Persons...... 165 Keepe v. Shell Oil Co...... 165 B. Representational Standing...... 167 W.S. Carnes, Inc. v. Chesterfield County...... 167 NOTES on Standing and Representational Standing ...... 168 C. Joinder of Claims and Parties Generally ...... 171 D. Common Joinder Situations...... 172 E. Nonjoinder, Misjoinder, in Simple and Complex Cases ...... 173 How Many Defendants Must One Name?...... 173 Hogan v. Miller ...... 173 Joinder of Parties In Unified Pleading from 2006 Onward ...... 174 F. Necessary Parties ...... 176 Shultz v. Schultz...... 176 Jett v. DeGaetani...... 177 NOTES on Necessary Parties...... 179 End of Doctrinal Distinctions Concerning Parties to Equity Suits...... 181 NOTES on Mechanics' Liens...... 182 G. Bringing All Claims Against All Parties in One Action ...... 183 General Liberality Established ...... 183 Fox v. Deese...... 183 Multiple Claims Problems ...... 190 Powers v. Cherin ...... 190 H. Misnomer……...... 194 Rockwell v. Allman ...... 194 I. John Doe Plaintiffs and Defendants...... 196 NOTES re Insurance and Insurers ...... 197 J. Wrongful Death...... 198 Damage Categories...... 198 Beneficiaries ...... 198 Cassady v. Martin...... 199 NOTE: Standing in Wrongful Death...... 201 Approval of Settlements ...... 202 Perreault v. Free Lance-Star ...... 202 NOTES on Wrongful Death ...... 208 K. Suing Estates of Deceased Persons ...... 209 Swann v. Marks ...... 209 L. Minors, Persons Under a Disability, and Convicts...... 212 Important Code Sections...... 212 Code §8.01-2 General Definitions...... 212 Code §8.01-8 How Minors May Sue...... 212 Code §8.01-9 Guardians ad litem for persons under disability...... 212 Powers and Responsibilities of Guardians...... 214 Cook v. Radford Community Hospital...... 214

- 163 - Stanley v. Fairfax Dept. of Social Services ...... 216 NOTE re Indigency...... 218 Prisoners...... 219 Code §53.1-221 Appointment of Committee; Bond ...... 219 Code §53.1-222 Powers and Liabilities of Committee ...... 219 Code §53.1-223 Restriction on suits against prisoners ...... 219 Cross v. Sundin...... 220 Hypotheticals...... 221 M. "Next Friends" ...... 221 Moses v. Akers ...... 221 "Next Friend" Pleading Format – Beware the Trap...... 222 N. Joinder – Adding, Dropping & Substituting Parties...... 223 Overview…...... 223 Rule 3:16 New Parties...... 223 Effect of Death of a Party ...... 224 Code §8.01-19 Effect of Marriage or Change of Name of Party ...... 224 Code §8.01-21 When Death or Disability Occurs After Verdict ...... 224 Code §8.01-22 Death or Disability of Plaintiffs or Defendants ...... 224 Code §8.01-25 Survival of causes of action...... 225 Death and the Statute of Limitations ...... 225 Substitution Procedure...... 226 Rule 3:17 Substitution of Parties...... 226 Void Suits and Nullities ...... 228 Chesapeake House on the Bay v. Virginia National Bank...... 228 NOTES on Assignment and Death ...... 229 O. Seeking Declaratory Relief...... 230 USAA Casualty Insurance Co. v. Randolph...... 230 Important Aspects of Declaratory Judgment Procedure ...... 234 Hypotheticals……...... 237

Devices exist in Virginia practice to assure the participation of all persons, human and juridical, with an interest in the dispute. While there is no basis for a (see Ortiz v. Barrett, 222 Va. 118, 278 S.E.2d 833 (1981)), most other joinder devices are available. Some of these, respecting aggressive pleading by a defendant against co- parties, are discussed in Chapter 11, RESPONSIVE PLEADINGS, COUNTERCLAIMS, CROSS-CLAIMS AND THIRD-PARTY PRACTICE. Traditional , bringing in a third-party defendant who is or may be liable for all or part of a defendant's obligation to a plaintiff, is also discussed in that Chapter, at section D. The present Chapter begins with general concepts defining parties and claims, and the normal principles governing aggregations of parties and claims. It also contains sections dealing with unknown parties, wrongful death, medical malpractice claims, and actions involving minors, convicts and persons under disabilities. It treats substitution of parties, and includes a section on actions and settlements involving joint tortfeasors.

- 164 - A. Aggrieved Persons

KEEPE v. SHELL OIL COMPANY 220 Va. 587, 260 S.E.2d 722 (1979) JUSTICE POFF delivered the opinion of the Court. [Chowney leased a gas station from Shell, and without permission from Shell formed a corporation to operate the station and own personal property on the site. Max Keepe guaranteed the lease, and with his wife Joy became stockholders of the corporation. Max worked for the station. After Shell allegedly caused the project to fail in various ways, everybody sued. The trial court recognized that Chowney had standing to sue, but rejected claims by the corporation and the Keepes, who appealed.] To have standing to sue for damages for tortious injury to property, a plaintiff must have an interest in the property injured. 59 Am. Jur.2d Parties § 29 (1971); cf. Cemetery Cons. v. Tidewater Fun. Dir ., 219 Va. 1001, 254 S.E.2d 61 (1979) (private party with no interest in contract may not sue on contract to question the validity of contractual provisions). Under the lease, Chowney acquired the right, for a one year term, to use Shell's "land ... buildings, improvements, and equipment" for the "operation of the automobile service station" and the right to market Shell's products. The leasehold estate was one of the property interests allegedly damaged by defendants' wrongful acts, and plaintiffs alleged that this interest was an asset of the corporation formed to operate the business contemplated by the lease. In support of the trial court's ruling, defendants argue that the corporation could acquire no property interest in the leasehold because the lease provided that Chowney could not assign his interest without Shell's written consent, "which consent was neither alleged, proved, nor given." Plaintiffs alleged, however, that the corporation had "conducted the business with the knowledge and consent of Shell", and the assignment clause provided that written "consent shall not be unreasonably withheld". If plaintiffs' allegation is established by evidence, Shell will be taken to have waived the requirement of written consent. See McGhee v. Cox , 116 Va. 718, 721-22, 82 S.E. 701, 702 (1914); Restatement (Second) of Property § 15.2, Comment f (1977); cf. Zurich Accident Ins. Co. v. Baum , 159 Va. 404, 409, 165 S.E. 518, 519 (1932) (provision prohibiting unwritten modification of contract may be

- 165 - orally modified). We are of opinion, therefore, that the trial court erred in ruling that the corporation was not a proper party-plaintiff. The Keepes argue that they have legal standing because, as stockholders of the corporation, they are actual owners of the business and all its assets, including the leasehold estate, good will, and the right to earn profits. We reject this argument. The corporation is a legal person, separate and distinct from the persons who own it, and the corporation, as the alleged owner and operator of the business, is the person entitled to its profits and the person injured by the wrongs alleged in the motion for judgment [Ed. note: this pleading would now be called a [complaint"]. Moreover, a stockholder has no standing to sue in his own right for an injury to the corporation on the ground the injury caused a depreciation in the value of his stock. 13 W. Fletcher, Cyclopedia of the Law of Private Corporations §§ 5911-13 (rev. vol. 1970). The cause of action belongs to the injured corporation, and a stockholder's remedy by derivative suit does not lie in this case. See Koch v. Realty Corporation, 205 Va. 65, 70-71, 135 S.E.2d 131, 134-35 (1964). Accordingly, we agree with defendants that the Keepes, as stockholders, have no standing to assert any of the claims stated in the motion for judgment. Nor does Max Keepe have standing as guarantor of Chowney's obligations under the lease. That status gave him no property interest in the leasehold or the business conducted thereunder, and there is no allegation that he incurred any damage as conditional obligor. Max Keepe was also an employee of the corporation. The motion for judgment alleged that defendants' wrongful acts caused the employees to lose their earnings when the lease was cancelled. Plaintiffs have cited no case, and our research has revealed none, which holds that an employee has standing to sue for loss of earnings resulting from a tort committed by a third party against his employer. We hold, therefore, that the Keepes were not proper parties-plaintiff and, as to them, the trial court's ruling was correct.

- 166 - B. Representational Standing

W. S. CARNES, INC. v. CHESTERFIELD COUNTY 252 Va. 377, 478 S.E.2d 295 (1996)

JUSTICE KEENAN delivered the opinion of the Court. The primary issue in this appeal concerns the validity of two ordinances which impose a $ 125 increase in the fee charged for new residential building permits. The Home Builders Association of Richmond, Inc. (the Association), and W. S. Carnes, Inc., a Chesterfield County homebuilder (collectively, the builders), filed a motion for declaratory judgment against the Board of Supervisors of Chesterfield County. . . The builders sought an order declaring invalid two ordinances adopted by the Board, which imposed a $ 125 increase in the permit fee charged for all new residential construction. . . . [T]he Association argues that, as a nonstock corporation which operates as a trade association for the common benefit of its members, the Association has standing to bring this suit. The Association notes that its status as a nonstock corporation permits it to sue or be sued in its corporate name. See Code § 13.1-826. The Association further argues that the declaratory judgment statutes are remedial in nature and must be liberally interpreted. See Code § 8.01-191. Thus, the Association asserts that it is a proper party to this declaratory judgment action. We disagree with the Association. A plaintiff has standing to institute a declaratory judgment proceeding if it has a "justiciable interest" in the subject matter of the proceeding, either in its own right or in a representative capacity. Henrico County v. F. & W., Inc., 222 Va. 218, 223, 278 S.E.2d 859, 862 (1981); Lynchburg Traffic Bureau v. Norfolk and Western Railway, 207 Va. 107, 108, 147 S.E.2d 744, 745 (1966). In order to have a "justiciable interest" in a proceeding, the plaintiff must demonstrate an actual controversy between the plaintiff and the defendant, such that his rights will be affected by the outcome of the case. See Code § 8.01-184; Cupp v. Board of Supervisors, 227 Va. 580, 589, 318 S.E.2d 407, 411 (1984) Here, the Association has failed to demonstrate that it has any rights that will be affected by the outcome of this case. The Association does not build houses in Chesterfield County and has not paid any building permit fees for new residential construction. Thus, the Association has not shown that an actual controversy exists between it and the County. This conclusion is not altered by the fact that the Association purports to act in a "representative capacity" on behalf of its members. An individual or entity does not acquire standing to sue in a representative capacity by asserting the rights of another, unless authorized by statute to do so. See, e.g., Code §§ 8.01-69, 20-88.45, 37.1-141. Therefore, we conclude that the trial court erred in ruling that the Association had standing to bring this action. Nevertheless, since W. S. Carnes, Inc. (Carnes) paid several building permit fee surcharges to Chesterfield County, the present action remains viable based on the controversy existing between Carnes and the County. See Cupp, 227 Va. at 589-90, 318 S.E.2d at 411.

- 167 - Standing and Representational Standing Notes

Standing to Sue. The general test of standing in Virginia is whether a party has sufficient interest in the subject matter as to assure that the litigants will be true adversaries and that the issues will be fully developed. Weichert Co. v. First Virginia Bank, 246 Va. 108 (1993). Substantive law will often control whether a person is permitted to sue. Thus, whether a person qualifies as a third-party beneficiary who may sue under an agreement is a matter of contract law, covered in statutes (See Code § 55- 22) and case decisions. Intrafamily and inter-spousal tort actions are similarly governed by aspects of tort law as well as procedure statutes. See, e.g., § 8.01-220.1, abolishing interspousal tort immunity. There are numerous decisions adumbrating the notions indicated in the material in this Chapter in such areas as medical malpractice. Exploration of the substantive law prior to commencing suit is thus doubly important. Contracts. A party, third-party beneficiary, or assignee may generally sue on a contract. Others, even if affected by the contract, lack standing. See Cemetery Cons. Inc. v. Tidewater Funeral Directors Assoc., 219 Va. 1001, 254 S.E.2d 61 (1979)(directors are strangers to contract between a cemetery and lot owners). A plaintiff who lacks standing cannot substitute new parties plaintiff who would have standing to maintain the action. See Wells v. Lorcom House Condominiums' Council of Co-Owners, 237 Va. 247, 377 S.E. 381 (1989). Representational Standing Redux – Environmental Matters. In a thorough review of its doctrine, the Supreme Court has observed that “representational standing” essentially allows an organization to bring a suit on behalf of its members and was a well-established principle in federal law by the mid-1990s. The Virginia Court noted that the United States Supreme Court, has explained that an organization will have representational standing when (a) its members would otherwise have standing to sue in their own right; (b) the interests it seeks to protect are germane to the organization’s purpose; and (c) neither the claim asserted nor the relief requested requires the participation of individual members in the lawsuit. See generally Philip Morris USA Inc. v. The Chesapeake Bay Foundation, 273 Va. 564, 643 S.E.2d 219 (2007). The “first prong” of the representational standing test requires that the representing organization include at least one member with standing to present, in his or her own right, the claim pleaded by the association. This is simply a requirement that any claim of standing be fundamentally based on the individual standing test laid out in Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992), the requirements of which are reiterated in the statutory provision considered by the Supreme Court of Virginia, Code § 62.1- 44.29. In order to satisfy the first prong of the Lujan test a plaintiff must have pled that at least one of its members has an “injury-in-fact.” In an environmental suit, allegations of injury to the environment are not sufficient to show a legally protected interest. However, environmental plaintiffs adequately allege injury in fact when they aver that they use the affected area and are persons for whom the aesthetic and recreational values of the area will be lessened by the challenged activity. Only an imminent injury is required. A plaintiff is not obligated to await the consummation of a threatened injury to obtain preventive relief. In an environmental case by a preservation organization against a manufacturer, the Supreme Court noted that where the foundation alleged that the discharge of nutrients in

- 168 - amounts and concentrations authorized by the permit has and will continue to cause injury to the foundation and its members who regularly use and enjoy the James River, a tributary of the Chesapeake Bay, for swimming, boating, kayaking, canoeing, sport fishing, and other educational and recreational pursuits, these constitute allegations of an actual and ongoing injury to the recreational interests of members of the foundation sufficient to satisfy the injury-in-fact prong of Lujan. Thus the foundation sufficiently pled a concrete, particularized and legally protected injury to at least one of its members. At the pleading stage, it is not required to name those members under the Virginia Court's decision in Philip Morris.. The “second prong” of the applicable standing test under the decision in Lujan requires a causal connection between the injury alleged and the actions of defendants. More specifically, in the context of a challenge to a State Water Control Board decision, the Supreme Court of Virginia has noted that a plaintiff must allege that the injury is fairly traceable to the decision of the Board and not the result of the independent action of some third party not before the court. The “fairly traceable” requirement ensures that there is a genuine nexus between a plaintiff’s injury and a defendant’s alleged illegal conduct. Traceability does not mean that plaintiffs must establish the nexus to a scientific certainty. The final prong of the individual standing test, particularly announced in environmental litigation, requires an injury that will likely be redressed by a favorable decision by the court. Standing is limited to injuries where a court may reasonably be expected to find a remedy. Claims must be such that a plaintiff personally would benefit in a tangible way from the court’s intervention. In the environmental context the Court stated that in appropriate cases civil penalties may be used to encourage defendants to discontinue current violations and deter them from committing future ones. A complete solution to the alleged injury is not required. It is enough to be able to address the harms of the named defendants. In the case of a foundation seeking to have the discharge permit set aside and for the discharge into the James River to cease until the manufacturer demonstrates that it is able to comply with the state designated use for the waterways, this result is a civil remedy that is available to an appropriate court of review. As such, the injury is redressable through a favorable decision by the court. Based on this preceding analysis, the foundation sufficiently pled an injury to at least one member that would grant Article III standing. The Supreme Court of Virginia's overview of representational standing in Philip Morris noted that additional two requirements for representational standing described in United States Supreme Court case law were not significant issues in recent Virginia litigation. These are the requirement that the interests the foundation seeks to protect are germane to its purpose or that the relief requested requires the participation of the individual members. Additionally, the remedy sought by an environmental protection foundation addressed the asserted injury and would not require the participation of individual members. Accordingly, these requirements in the test for representational standing were been met. In the Virginia case, given the conclusion that the petition filed in the circuit court met, under the criteria of Code § 62.1-44.29, all the requirements that would grant Article III standing for an organization seeking representational standing, the statute authorizes representational standing to a corporate person to seek judicial review of a decision of the State Water Control Board and the foundation’s petition was thus sufficient to survive demurrer.

- 169 -

- 170 -

C. Joinder of Claims and Parties Generally

A party may join claims or defenses under alternative factual or legal theories, where they arise out of same transaction or occurrence. It is surely proper to join related claims. See, e.g., Felvey v. Shaffer, 186 Va. 419, 42 S.E.2d 860 (1947) (proper to combine in a single action a case for insulting words and slander, and assault and battery, all arising out of a single incident). Ordinarily the proper course would be to set up separate counts in the complaint to mark the different claims being advanced. In any event, the trial court has discretion to determine whether conjoined causes of action will be tried together. See, e.g., Gemmell v. Powers, 170 Va. 43, 195 S.E. 501 (1938); Clark v. Kimnach, 198 Va. 737, 96 S.E.2d 780 (1957). Tort and Contract claims. A party may, under Code § 8.01-272, join a claim in tort with one in contract provided that all claims arise out of the same transaction or occurrence. This position is considerably more favorable to joinder of claims than earlier law, but the trial court retains the discretion to order separate trial for any claim. cases, of course, may be based on a variety of premises. Virginia does not recognize "strict liability" as some states do, and products actions proceed as a sort of hybrid with tort and contract or warranty features. Privity notions were substantially abolished by statute. Now, an action against the manufacturer or seller of goods may be based on breach of warranty or negligence, under the UCC provision, Virginia Code § 8.2-318. Damages for personal injury and/or property damages based on negligence proceed under § 8.01-223. In Equity -- Multifariousness. Equity is supposed to make a "clean sweep" of the issues open between parties, if possible. Thus in general equity is open to combining claims. There are, however, limitations. It is said, for example, that two independent and unrelated causes between the same parties may not be joined. Other suspect situations are where all plaintiffs do not share a similar right or interest, or where several defendants are not comparably situated. There have been few cases decided by Virginia appellate courts in the last 80 years finding a defect of this kind, and hence it may be that these strictures have been relaxed by the evolution of modern notions of efficient disposition of legal disputes. However, a demurrer may be used to challenge perceived multifariousness in an equitable complaint. It remains to be seen whether the adoption of a single form of action in 2006 will obviate this doctrine. There is no statutory change directly addressing the issue, and there is general Virginia law that combining two disparate events is improper. Multiple Plaintiffs or Defendants. The common law rule in actions at law was that plaintiffs could join together in a suit only if they jointly held a right of action against the parties sued. This doctrine generally appears to survive in Virginia. Multiple plaintiffs with different rights of action, even if they arise from the same transaction or occurrence, ordinarily may not combine their claims in a single complaint. One exception, recognized in Code § 8.01-36, allows parents to maintain an action along with an injured child even though the child sues for personal injuries and the parents sue only for the derivative expenses of care. Subject to the concern for avoiding multifariousness, the court of equity will permit joint plaintiffs to proceed in a

- 171 - single action with different claims (generally, where those disparate rights of action nonetheless derive from a common nucleus of fact). The broad language in Code §§ 8.01-5 and -7, noting that misjoinder is neither grounds for demurrer nor abatement and authorizing the court upon request (or sua sponte) to add needed parties, describes a general power which can only be exercised consistent with the Rules of Court and alignment of party principles noted above. The statutory power is most fully effected in equity cases. Also note that where a suit is commenced by an improper plaintiff, lacking standing to sue, the proper relief is to commence a new action rather than to join or substitute a proper party. See Chesapeake House on the Bay, in section H below. Thirty or More Parties in Decedent's Estate or Trust Case. The General Assembly has continued and refined the application of the provisions of Code § 8.01-23 concerning procedures in suits involving a decedent's estate or a trust where the number of parties exceeds 30. If any one of the parties jointly interested with others in any question arising therein dies, the court may proceed with disposition "if in its opinion all classes of interests are represented and no one will be prejudiced thereby." The court may therefore proceed to render a decree as if such party were alive; decreeing to the heirs, devisees, legatees, distributees, or personal representatives, as the case may be, such interest as the deceased person, if alive, would be entitled to. The provisions of § 8.01-322 (allowing "reopening" of proceedings up to two years after the judgment!) apply to decrees entered that Code provision.

D. Common Joinder Situations

The common law has been extensively modified in Virginia in connection with joinder of parties, both necessary and permissive. Joint tortfeasors, minors and persons under a disability, wrongful death cases, and medical actions are discussed in later sections of this chapter. Some of the other important principles which now obtain are these: „ Joint obligors: A plaintiff may sue one, several or all of a group of joint obligors. Successive judgments against different members of the joint obligor group will not be deemed an "election of remedies" barring action against the others. Successive judgments may be taken in serial actions, or in a single action if service of process or other factors lead to syncopated completion of the suit. Only satisfaction of the obligation against one or more of the obligors will act to release the others. Code §§ 8.01-30, 8.01-442. z Executors and Administrators: on claims arising during the decedent's lifetime, executors and administrators must generally sue and be sued in their representative capacity, and the caption of the pleading will normally recite the capacity in which the action proceeds. For claims arising after decedent's death, such as contracts undertaken by the executor in managing the estate, executors and administrators may sue in either a personal or representative capacity, though they are made defendants for such undertakings in suits in their personal capacity. See Code §§ 64.1-144 and -145.

- 172 - z Partnerships: actions by or against a partnership may be styled with the names of individuals "as co-partners doing business under the firm name of ______", or under the common name by which the firm trades. See Code § 50-8.1. A suit may name individual partners as defendants without naming the partnership. See McCormick v. Romans & Gunn, 214 Va. 144 (1973). [Note, suits within a partnership, by one member against another, or between the firm and one or more members, have traditionally been brought as equitable claims because of the fiduciary nature of the relationships and the common need for a complex accounting.] z Corporations: a corporation should sue and be sued in the official corporate name -- i.e., that shown on the charter registered with the Corporation Commission. If the corporation is sued in a trade name or common name, the designation may be corrected by amending. No statute of limitations consequence attends a simple amendment to correct the style of suit to the technically correct form where the correct defendant has been served and is before the court, albeit in a colloquial rather than official name. Jacobson v. Southern Biscuit Co., 198 Va. 813 (1957). See § 8.01-6, and further discussion of amendment in Chapter 8, section M.

E. Nonjoinder, Misjoinder, in Simple and Complex Cases

The civil procedure code, Title 8.01 of the Code of Virginia, has sections toward the outset that are designed to make adjustment or correction of problems of joining parties non-fatal issues. In addition, case law has adopted some unusual doctrines in Virginia.

How Many Defendants Must One Name?

HOGAN v. MILLER 156 Va. 166, 157 S.E. 540 (1931)

JUSTICE CAMPBELL delivered the opinion of the court. [Plaintiff was hurt in a traffic crash. She sued the owner/driver of the taxi in which she was riding, but did not name the driver of the other car, whom defendant accused of causing the accident. This was challenged as “non-joinder.” The Supreme Court noted that statutes and rules permit adding parties in several ways, but concluded that a plaintiff need not do so in cases like this:] The settled rule in this State, which in our opinion has not been disturbed by the enactment of [the predecessor of Code § 8.01-5], is well stated in Staunton Mut. Telephone Company v. Buchanan, 108 Va. 810, 62 S.E. 928, 929, as follows: "Co- trespassers are jointly and severally liable, and the party injured may sue all of them jointly, or two or more of them jointly, or one of them severally, as he may see proper."

- 173 - This conclusion is fortified when considered in connection with [the precursor of Code § 8.01-443, which read then essentially as it does now]: "A judgment against one of several joint wrongdoers shall not bar the prosecution of an action against any or all the others, but the injured party may bring separate actions against the wrongdoers and proceed to judgment in each, or, if sued jointly, he may proceed to judgment against them successively until judgment has been rendered against, or the cause has been otherwise disposed of as to, all of the defendants, and no bar shall arise as to any of them by reason of a judgment against another, or others, until the judgment has been satisfied. If there be separate judgments against different defendants for a joint wrong, the plaintiff shall elect which of them he will prosecute, but the payment or satisfaction of any one of such judgments shall be a discharge of all, except as to the costs." The motion of the defendant, in our opinion, was properly overruled. . . [Editor’s Note: At the time of this case, a defendant was not allowed to bring a third-party claim against another tortfeasor. Today this problem could be solved in that fashion. See Chapter 11 of these Materials. The point is: the Court allowed plaintiff to choose one defendant even back then, when the selected defendant’s only remedy would be to lose the first case then bring a separate action for contribution, re-trying the issues of who was at fault.]

Joinder of Parties In Unified Pleading from 2006 Onward

The common law rule in actions at law was that plaintiffs could join together in a suit only if they jointly held a right of action against the parties sued. This doctrine generally appears to survive in Virginia. Multiple plaintiffs with different rights of action, even if they arise from the same transaction or occurrence, ordinarily may not combine their claims in a single complaint. One exception, recognized in Code § 8.01- 36, allows parents to maintain an action along with an injured child even though the child sues for personal injuries and the parents sue only for the derivative expenses of care. Subject to the concern for avoiding multifariousness, the tradition in equity was to permit joint plaintiffs to proceed in a single action with different claims (generally, where those disparate rights of action nonetheless derive from a common nucleus of fact or relate to the same property). The broad language in Code §§ 8.01-5 and 8.01-7, noting that misjoinder is neither grounds for demurrer nor abatement and authorizing the court upon request (or sua sponte) to add needed parties, describes a general power which can only be exercised consistent with the Rules of Court and alignment of party principles noted above. The statutory power has heretofore been most fully effected in equity cases, but the provisions of the Code do not distinguish between legal or equitable proceedings, and hence they are exactly in tune with the 2006 reforms of Virginia pleading. A final introductory warning would necessarily be that, in Virginia, where a suit is commenced

- 174 - by an improper plaintiff, lacking standing to sue, the proper relief is to commence a new action rather than to join or substitute a proper party.11 Procedure for Adding Parties is Now Unified. Under revised Part Three of the Rules of Court, a defendant's motion to add an additional party in a civil action may be granted if the court determines that such additional party is "a person to be joined if feasible.'' This provision was not formerly applicable under the now-superseded Part Two of the Rules to equity proceedings. Today it applies to all civil actions, under Rule 3:12. A person who may be added under Rule 3:12 is one who meets the criteria set forth in the Rule: the person to be added must be subject to service and in his absence complete relief cannot be accorded among those already parties, or he claims an interest relating to the subject of the action and is so situated that the disposition of the action in his absence may (i) as a practical matter impair or impede his ability to protect that interest or (ii) leave any of the persons already parties subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations by reason of his claimed interest. The apparent premise of Rule 3:12 is that it is the defendant who is seeking to add parties who should be involved in the disposition of a case. This is shown by the fact that the timing of the application is shortly after the plaintiff has served process, a point at which the plaintiff has presumably sued those persons whom it is thought will be held liable. Also, a plaintiff's addition of more parties defendant would normally be done by amending the complaint under Rule 1:8, which is unchanged in the 2006 reform of civil pleading in Virginia. In addition, a plaintiff's option to add new parties is expressly recognized in the provisions of Rule 3:16, which is carried forward from prior practice. Thus it appears that a plaintiff's motion to join additional parties may be granted under the circumstances set forth in Rule 3:12, and additionally, according to Rule 3:16 "as the ends of justice may require.'' A motion under Rule 3:16 is available – by its very terms – to plaintiffs only. According to a key statute, a plaintiff may join "alternate" defendants, based on inconsistent or "alternative" pleading under which different people are charged with the same liability, perhaps under inconsistent factual or legal theories.12 Under very broad statutes – which pointedly do not distinguish between proceedings under claims at law or in equity – the trial court may order additional parties joined, both sua sponte or on motion of a party "[i]n any case in which full justice cannot be done, or the whole controversy ended, without the presence of new

11 See, e.g., Chesapeake House on the Bay, Inc. v. Virginia Nat'l Bank, 231 Va. 440, 344 S.E.2d 913 (1986). 12 See Code §8.01-281(A), which provides in relevant part: " A party asserting either a claim, counterclaim, cross-claim, or third-party claim or a defense may plead alternative facts and theories of recovery against alternative parties, provided that such claims, defenses, or demands for relief so joined arise out of the same transaction or occurrence. 27 Code §8.01-7. 28 Code §8.01-7 provides: "In any case in which full justice cannot be done, or the whole controversy ended, without the presence of new parties to the suit, the court, by order, may direct the clerk to issue the proper process against such new parties, and, upon the maturing of the case as to them, proceed to make such orders or decrees as would have been proper if the new parties had been made parties at the commencement of the suit."

- 175 - parties to the suit." That language, from Code § 8.01-7, allows the court to add new parties with no showing whatsoever being required. It is echoed in a sister provision, Code §8.01-5(A), which is also broader than Rule 3:12, and also applies a simple "ends of justice" standard: A. No action or suit shall abate or be defeated by the nonjoinder or misjoinder of parties, plaintiff or defendant, but whenever such nonjoinder or misjoinder shall be made to appear by affidavit or otherwise, new parties may be added and parties misjoined may be dropped by order of the court at any time as the ends of justice may require. Formerly, there was no Supreme Court Rule in the equity rules of Part Two corresponding to what are now Rules 3:12 and 3:16. However, the courts hearing equitable claims have had under the statutes noted above an equivalent or greater authority to add parties, which accords with traditional inherent equity power. Thus, under the unified procedures effective in 2006 the application of Rules 3:12 and 3:16 in all cases, whether legal or equitable in theory, will not alter the practice of the courts in making sure that appropriate persons are made parties to the litigation as needed.

F. Necessary Parties

SCHULTZ v. SCHULTZ 250 Va. 121; 458 S.E.2d 458 (1995)

JUSTICE HASSELL delivered the opinion of the Court: In this appeal of a decree in a suit to dissolve a corporation, we consider whether a stockholder who has been ordered by a court to take certain action is a necessary party. Gerald A. Schultz and Marilyn S. Schultz, husband and wife, both certified public accountants, were the sole shareholders, directors, and officers of an accounting firm organized as a Virginia professional corporation, Gerald A. Schultz & Associates, P.C., Inc. Gerald and Marilyn are also litigants in an acrimonious divorce proceeding in the Circuit Court of Middlesex County. [Despite an order from the divorce court not to mess with the family’s assets, Gerald scooted over to a nearby jurisdiction and filed a proceeding to dissolve the accounting company because of the 1-to-1 deadlock of its board of directors. Numerous significant rulings were made in that proceeding, many without notice to Marilyn, whom Gerald had not named as a party (!)]. The dissolution court granted the relief that Gerald had requested by entering an order approving the plan of dissolution. That order granted Gerald relief against Marilyn individually in numerous respects. The order directed that Marilyn cooperate with the receiver and provided that she "shall execute such documents, agreements and instruments and produce to the Receiver in a prompt manner all documents and information requested by the Receiver in connection with the Plan [or] implementation of the Plan." The plan also provided for the formation of a new corporation in which

- 176 - Marilyn would be the sole shareholder. The plan imposed numerous obligations upon Marilyn and her court-ordered new corporation, one of which is to require the corporation to indemnify and hold Gerald A. Schultz & Associates harmless from certain claims. Certainly, under these facts, Marilyn is a necessary party against whom relief was both sought and granted individually in this suit. And, as we have said, "a court cannot render a valid judgment when necessary parties to a proceeding are not before the court." Allen v. Chapman, 242 Va. 94, 99, 406 S.E.2d 186, 188 (1991); McDougle v. McDougle, 214 Va. 636, 637, 203 S.E.2d 131, 133 (1974). Therefore, we hold that the dissolution court erred by failing to grant Marilyn's motion to vacate the dissolution order.

JETT v. DEGAETANI 259 Va. 616, 528 S.E.2d 116 (2000)

[While a couple was married, the wife's parents allegedly promised to sell them a parcel of land for a homesite, at a favorable price. After the couple split up, the former husband nonetheless sued his former in-laws to compel them to sell the land to himself and his ex-wife. He did NOT name the ex-wife in the suit, thinking that he only sought relief against her parents and that, if anything, she would get a benefit if he won the case.] The Jetts argue that the chancellor erred by ordering them to execute a deed conveying the property to DeGaetani and Joyce Jett because Joyce Jett is a necessary party to this suit, and DeGaetani failed to make her a party to the proceeding. . . . We have held that a court cannot render a valid judgment when necessary parties to a suit are not before the court. Atkisson v. Wexford Associates, 254 Va. 449, 455, 493 S.E.2d 524, 527 (1997); Asch v. Friends of Mt. Vernon Yacht Club, 251 Va. 89, 91, 465 S.E.2d 817, 818 (1996); Schultz v. Schultz, 250 Va. 121, 124, 458 S.E.2d 458, 460 (1995); Allen v. Chapman, 242 Va. 94, 99, 406 S.E.2d 186, 188 (1991); McDougle v. McDougle, 214 Va. 636, 637, 203 S.E.2d 131, 133 (1974). We have also stated the following principles which are equally pertinent here: " 'Necessary parties include all persons, natural or artificial, however numerous, materially interested either legally or beneficially in the subject matter or event of the suit and who must be made parties to it, and without whose presence in court no proper decree can be rendered in the cause. This rule is inflexible, yielding only when the allegations of the bill state a case so extraordinary and exceptional in character that it is practically impossible to make all parties in interest parties to the bill, and, further, that others are made parties who have the same interest as have those not brought in, and are equally certain to bring forward the entire merits of the controversy as would the absent persons. 'This cardinal principle governing as to parties to suits in equity is founded upon the broad and liberal doctrine that courts of equity delight to do complete justice by determining the rights of all persons interested in the subject matter of litigation, so that the performance of the decree rendered in

- 177 - the cause may be perfectly safe to all who are required to obey it and that further litigation touching the matter in dispute may be prevented.' Kennedy Coal Corp. v. Buckhorn Coal Corp., 140 Va. 37, 49, 124 S.E. 482, 486 (1921). We have also stated that "'[necessary parties'] interests in the subject matter of the suit, and in the relief sought, are so bound up with that of the other parties, that their legal presence as parties to the proceeding is an absolute necessity, without which the court cannot proceed. In such cases the court refuses to entertain the suit, when these parties cannot be subjected to its jurisdiction.'" Bonsal v. Camp, 111 Va. 595, 597-98, 69 S.E. 978, 979 (1911). We hold that the chancellor lacked the power to proceed with DeGaetani's bill of complaint because Joyce Jett was a necessary party to that litigation. The chancellor's order directed the Jetts to execute and deliver a deed that conveyed the property to DeGaetani and Joyce Jett as tenants in common. The chancellor's order made a determination that Joyce Jett has an interest in the real property as a tenant in common. This order, without question, imposed certain duties and obligations upon her because of her property interests as a tenant in common. Yet, she was not before the court even though she had a material legal interest in the subject matter of the suit. Contrary to DeGaetani's assertions, no exception exists which would have permitted the chancellor to enter a valid judgment in this suit without Joyce Jett's presence. We held in McDougle that a court may adjudicate a suit when it is practically impossible to join all parties in interest and the absent parties are represented by others having the same interest or when an absent party's interests are separable from those of the parties before the court so that the court may enter an order without prejudice to the rights of the absent party. 214 Va. at 637, 203 S.E.2d at 133. Here, it was not practically impossible to join Joyce Jett as a party, and her interests are not separable from DeGaetani's interests to the extent that the chancellor could enter an order without prejudice to her rights. Indeed, the challenged final order conferred upon her the real property rights of a tenant in common with the related duties and obligations. Accordingly, we will reverse the chancellor's order, and we will remand this proceeding to the circuit court with instructions that it issue an order requiring that DeGaetani convey the property to the Jetts. The Jetts shall be required to return the $36,300 to DeGaetani. The remand will be without prejudice to the rights, if any, that DeGaetani may have to join Joyce Jett as a party to any further proceedings.

- 178 - Notes on Necessary Parties

Necessary Parties. The foregoing cases make it clear that a court cannot render a valid judgment when necessary parties to a suit are not before the court. Necessary parties include all persons, natural or artificial, however numerous, materially interested either legally or beneficially in the subject matter or event of the suit and who must be made parties to it, and without whose presence in court no proper decree can be rendered in the cause. The Virginia Supreme Court has called this rule inflexible, yielding only when the allegations of the bill state a case so extraordinary and exceptional in character that it is practically impossible to make all parties in interest parties to the bill, and, further, that others are made parties who have the same interest as have those not brought in, and are equally certain to bring forward the entire merits of the controversy as would the absent persons. Previously, the Supreme Court stated on occasion that there was a special emphasis on necessary party doctrine in suits in equity, because of the tradition that "courts of equity delight to do complete justice by determining the rights of all persons interested in the subject matter of litigation, so that the performance of the decree rendered in the cause may be perfectly safe to all who are required to obey it and that further litigation touching the matter in dispute may be prevented." The Court also stated that "[necessary parties'] interests in the subject matter of the suit, and in the relief sought, are so bound up with that of the other parties, that their legal presence as parties to the proceeding is an absolute necessity, without which the court cannot proceed. In such cases the court refuses to entertain the suit, when these parties cannot be subjected to its jurisdiction." Note that Code § 8.01-276 allows a motion "for lack of jurisdiction over an to be made "at any time.” It apparently is not a waivable objection. The concept of necessary parties in Virginia has been enunciated in a large number of Virginia cases. It is fair to say that most of those cases, particularly in the early years, were in equity. However, the decisions of the Supreme Court of Virginia in recent decades do not distinguish between the standards for deeming a non-party "necessary" on the basis of which "side" of court that case would have been litigated on prior to 2006. Rather, necessary parties are defined by their connection to the particular dispute before the court. The Supreme Court has said that necessary parties are those whose presence is essential to a complete, fair determination of the controversy. Thus, for example, in a suit for distribution of an estate, all fiduciaries and distributees are necessary parties. All cotenants are necessary parties in a suit to partition land. Trustees and beneficiaries in antecedent deed of trust recorded on unimproved land are necessary parties in suit to enforce mechanic's lien on improvement. Nearly a century ago, the Supreme Court characterized necessary parties as those "whose interests in the subject matter of the suit, and in the relief sought, are so bound up with that of the other parties, that their legal presence as parties to the proceeding is an absolute necessity, without which the court cannot proceed.'' This standard has been reiterated more recently, without any distinction between legal or equitable claims. The court stated that necessary parties include all persons, natural or artificial, however numerous, materially interested either legally or beneficially in the subject matter or event of the suit and who must be made parties to it, and without whose presence in court no proper decree can be rendered in the cause.

- 179 - Virginia law requires that such a party be joined in order to prevent a multiplicity of litigation and to avoid depriving a person of property without an opportunity to be heard. The necessary party rule is designed to avoid depriving a person of his or her property without giving that person an opportunity to be heard. It yields only when the allegations of the bill state a case so extraordinary and exceptional in character that it is practically impossible to make all parties in interest parties to the bill, and, further, that others are made parties who have the same interest as have those not brought in, and are equally certain to bring forward the entire merits of the controversy as would the absent persons. As noted at the outset of this section, a court cannot render a valid judgment when necessary parties to the proceedings are not before the court. If necessary parties are absent, the court should refuse to entertain jurisdiction. A suit should be dismissed if absent necessary parties cannot be added. It is reversible error to render a decree in the absence of a necessary party. Nonjoinder and Misjoinder. As under prior practice, no civil lawsuit in Virginia will "abate" or be defeated for nonjoinder or misjoinder. Under Code §8.01-5, misjoinder of parties should be raised by a motion to drop the improperly joined party. Misjoinder is correctable by the court's power to order any parties misjoined dropped from the action. As also noted above, the court has power to correct nonjoinder under Code §8.01-7, and under §8.01-5 the court may do so "at any time.'' Section 8.01-5(A) specifically permits the either the plaintiff or the defendant to submit proof by affidavit to the court to establish nonjoinder or misjoinder. In the new Part Three of the Rules of Court, Rule 3:12 is alternative authority under which new parties may be added as and when the need is recognized. However, Rule 3:12 carries forward into the 2006 revisions of civil procedure the limitation of former practice under the predecessor rule, that the motion to join an additional party must be made within 21 days after the service of the motion for judgment. Since, in Virginia, statutes oust the effect of any rules which conflict with the General Assembly's enactment, the timing limit of Rule 3:12 may be of little consequence, since a trial judge may consider the factors set forth in the rule while technically ruling under authority provide by Code §§8.01-5 and 8.01-7. The Rule is useful, however, in that it adds a specification of specific factors bearing upon the question of when nonjoinder is needed, as well as when it is prejudicial and uncorrectable, and dismissal is appropriate.

- 180 -

End of Doctrinal Distinctions Concerning Parties to Equity Suits.

Historically it was a well-articulated policy of the equity court to be active in bringing in all interested parties. This was an inherent power of the equity courts, first specifically codified in the Code of 1919, §6139, and subsequently in former Code §8- 129. In effect this flexibility – pioneered in the courts of equity – was extended by the General Assembly to the courts of law by Code § 8.01-5 and Code §8.01-7 discussed above. Thus the greater aspiration of equity in the Nineteenth Century to bring interested parties before the court and to settle the rights of all persons and to dispose of the controversy entirely has been made applicable to cases predicated on a theory of liability of law as well. The modern rule – applicable to all civil actions under these statutes and new Part Three of the Rules today – is to allow any person to become a party whose rights might be adversely affected by the suit. Years ago, there was a perceived danger in equity cases, perhaps more than at law, that interested persons would not be brought into the suit because they may not have been made formal defendants, thereby becoming entitled to notice. Not infrequently, the main contest in an equity claim is not between the adversaries arrayed formally as plaintiff and defendant, but among fellow plaintiffs or defendants who have conflicting interests and are competing to determine their respective shares of the liability or benefit. The court in such cases must, therefore, be especially vigilant to be sure all interested parties are joined using the mechanisms discussed above. An action on a claim at law, on the other hand, is more frequently bilateral, that is, all members of each side are jointly interested in precisely the same way (third-party practice is a major exception), and the major contest is between the plaintiff and defendant. The mechanisms discussed above, both in the Code of Virginia and the Rules of Court under revised Part Three, are more than sufficient to allow the court in any case where the subject matter requires it to bring in additional parties. No distinction between legal claims and equitable claims is made in either the statutes or the Rules of Court, so the pragmatic and concrete considerations of each pending case will control.

- 181 - Notes on Mechanics' Liens

What is a Mechanics' Lien, and Who are Necessary Parties? A mechanic’s lien is a statutory right of a tradesman or company which furnished goods or services to place a lien on the property benefited, so as to help assure payment. In Walt Robbins, Inc. v. Damon Corporation, 232 Va. 43, 348 S.E.2d 223 (1986), and related cases, the Supreme Court of Virginia held that – in addition to the landowner – the beneficiary of the deed of trust recorded prior to the commencement of the project was a necessary party because the beneficiary had a property right which entitled him to notice and an opportunity to challenge the perfection of the mechanic's lien or to invoke the forfeiture provisions of Code § 43-23.1. Moreover, the trustee under the deed of trust was held to be a necessary party to the suit seeking enforcement by judicial sale because, absent jurisdiction over his person, the chancellor could not enter a decree divesting him of legal title to the property. And, What is "Bonding Off" the Lien? In Kane v. NuScope, 243 Va. 503, 416 S.E.2d 701 (1992), the Virginia Court provides an explanation of Code §§ 43-70 and - 71, known in the construction and repair industries as the "bonding-off" statutes. In short compass, where the tradesman files the correct papers in the required deadline, a lien is automatic. The "bonding off" provisions give the landowner or others an assured means of clearing that lien. By filing a bond sufficient to cover the lien, it will be discharged. If the tradesman is not ultimately paid, he or she can go against the bonding company, which has segregated assets to cover the liability, and the tradesman need not seek payment from the landowner or lenders associated with the property. ______

- 182 - G. Bringing All Claims Against All Parties in One Action

General Liberality Established

FOX v. DEESE 234 Va. 412, 362 S.E.2d 699 (1987)

JUSTICE STEPHENSON delivered the opinion of the Court. Fenroy A. Fox, individually and trading as Hosea Productions, filed an eight-count amended motion for judgment against the City of Richmond (the City); Manuel Deese, Richmond's City Manager; Jerry N. Johnson, Director of the City's Department of Community Facilities; Grady James Mathias, Assistant Director of the City's Department of Community Facilities; and Jack Fulton, the City's Director of Public Safety. Counts I, II, III, V, and VI sound in tort, and Counts IV, VII, and VIII sound in contract. The trial court sustained "demurrers to all eight counts by all of the defendants . . . without leave to amend." . . . The trial court entered an order dismissing Fox's case with prejudice. In this appeal, Fox challenges all the trial court's rulings. I. ALLEGED FACTS AND CLAIMS The facts alleged in Fox's amended motion for judgment are as follows.13 Fox is engaged in the business of producing and promoting shows and concerts in the various facilities available throughout the Richmond area. Deese, at all times relevant to this action, was Richmond's City Manager. Mathias was Acting Director of the City's Department of Community Facilities until June 23, 1980, when he became the Assistant Director of that department. Johnson became the City's Director of Community Facilities on or about June 23, 1980. In late May and early June 1980, Fox engaged in a series of meetings with Deese, Mathias, and Fulton relative to Fox's promotion of an outdoor "Mardi Gras" concert scheduled to be held at the City Stadium on July 4 and 5, 1980. At these meetings, the parties discussed the terms and conditions Fox had to meet to secure the use of the City Stadium for the concert. Deese made handwritten notes of the requirements agreed upon in these discussions and gave the notes to Fox. On June 2, 1980, at the conclusion of the final meeting, Deese directed Mathias to prepare a written contract reflecting the requirements contained in the handwritten notes of that meeting. Fox was assured that he could hold the Mardi Gras concert at the City Stadium if he met these requirements. Further, he was instructed to secure written contracts with all concert performers by June 16, 1980. Based on this representation, Fox, on his own behalf and through his agents, contracted with various performers and with light and sound crews at a cost of approximately $125,642. Because Fox was required to protect the stadium field from damage, he also made arrangements to rent a field cover at a cost of $17,979.79.

13 As to all defenses raised by demurrer, we will apply the rule that a demurrer admits the truth of all material facts well pleaded, including facts expressly alleged and all reasonable inferences arising therefrom. Bowman v. State Bank of Keysville, 229 Va. 534, 536, 331 S.E.2d 797, 798 (1985).

- 183 - Mathias prepared a written contract dated June 10, 1980, which he first presented to Fox on June 13, 1980. The terms and conditions of this contract differed significantly from the requirements set forth in Deese's notes. The written contract contained charges and additional expenditures never previously discussed, including clean-up costs (traditionally borne by the City out of its rental fee), an additional payment to the City of 3% on all ticket sales, and a $25,000 deposit for City Police security. On numerous occasions, Fox requested Deese to remove these new conditions; Deese, however, refused to do so, and on or about June 19, 1980, he told Fox that any changes would have to be made by Mathias. Had Fox been aware of these additional requirements prior to committing himself to pay approximately $143,000, he would have either cancelled the concert or held it elsewhere. By this time, however, Fox was not in a position to change his plans due to the commitments and expenditures he already had made. Thus, Fox was in a position from which he could not retreat and ultimately was forced to agree to the new requirements. Additionally, Mathias represented to Fox that it was City policy to pay the City's staff double time on July 4th, and time and a half on July 5th. This representation was incorrect, and Mathias knew or should have known it was not City policy. Relying upon Mathias' misrepresentation, Fox agreed to this pay provision in the written contract, which resulted in an overcharge to Fox of $3,173.42. Beginning on June 16, 1980, and thereafter, Mathias also repeatedly assured Fox that concert tickets were on the computer, ready for sale. Tickets were not placed on sale, however, until on or about July 1, 1980, just three days before the concert. Relying upon Mathias' assurances, Fox spent $27,000 for advertising. Because tickets were not ready for sale as represented by Mathias, this expenditure was wasted. Mathias was supposed to have had the contract prepared by June 6, 1980; however, he intentionally delayed its preparation and did not present the contract to Fox until June 13, 1980. On June 16, 1980, Fox went to Mathias in an attempt to get him to execute the contract. Mathias, however, refused to sign the contract and referred Fox to Deese. On June 19, 1980, Deese referred Fox back to Mathias, and on that date, Fox again approached Mathias in an effort to get him to execute the contract. Mathias, however, suggested that they wait until they could get all parties together, including Joseph Baldacci, who ran the Richmond Concessionaire. On June 23, 1980, Fox met with defendants Mathias, Deese, Johnson, and Fulton. Baldacci and two other men were also present at the meeting. At that time, Mathias purportedly signed the contract and gave it to Fox. Mathias, in fact, did not sign the contract, specifically intending to delay again the date that the tickets were to be placed on sale. At the time of this meeting and in the presence of the above individuals, Mathias further purported to contact Audrey Booth at the Richmond Coliseum and order her to place the tickets on sale. Actually, Mathias did not contact Booth at that time. Shortly after the June 23, 1980 meeting, Fox again approached Mathias. Mathias, however, refused to deal further with Fox and referred him to Johnson. Johnson signed the contract on June 24, 1980, but did not place the tickets on sale through the Ticketron outlets until approximately three days prior to the concert.

- 184 - Fox asserts that each individual defendant was acting in his individual capacity and not within the scope of his employment. Based upon the foregoing factual allegations, Fox asserts the following claims in his amended motion for judgment: Count I. In Count I, Fox claims that he relied upon Deese's representations that Fox could hold the concert at City Stadium on July 4 and 5, 1980, if Fox complied with the terms and conditions set forth in Deese's handwritten notes. Relying upon these representations, Fox made certain financial commitments. Thereafter, Fox was advised that he would have to comply with additional requirements. Had Fox known of these additional requirements before he made the commitments, he would not have held the concert at City Stadium. By the time he learned of these new terms and conditions, however, he was unable to change his plans because of the obligations he had assumed. Fox asserts that Deese "knew or should have known" of the additional requirements before Fox made the commitments. However, Deese "maliciously and in reckless disregard of [Fox's] rights, failed to disclose these facts to [Fox]." Fox alleges that Deese's acts amounted to "constructive and/or actual fraud, deceit or misrepresentation" and resulted in Fox sustaining economic loss of $137,500. Fox also seeks punitive damages of $100,000. Count II. In this count, Fox claims that Mathias represented to him that as of June 16, 1980, concert tickets were on sale. This representation was false; tickets were not placed on sale until July 1, 1980. Relying upon Mathias' representation, Fox expended approximately $27,000 in needless advertising. Mathias also represented to Fox that it was City policy to pay the staff double time on July 4 and time and a half on July 5. This representation was false. Relying upon this misrepresentation, Fox, to his detriment, agreed to pay an additional sum of $3,173.42. Fox alleges that Mathias knew or should have known that these representations were false. Consequently, Fox claims compensatory damages of $30,173.42 and punitive damages of $25,000. Count III. In Count III, Fox claims that Mathias, in an attempt to "either sabotage the concert and/or reduce the number of attendees, . . . maliciously and intentionally interfered with [Fox's] contract with the City . . . and [Fox's] prospective economic advantage." To support this claim, Fox alleges, inter alia, that Mathias intentionally delayed the preparation and execution of the contract, and intentionally delayed placing the tickets on sale. As a result, Fox claims compensatory damages of $637,500 and punitive damages of $250,000. Count IV. Count IV is a contract claim against the City. In this count, Fox claims that he was required to pay the salaries of 149 police officers for each concert day at a total cost of $32,520.78. In the written contract dated June 10, 1980, Fox had agreed to pay "all cost of City Police personnel for a minimum of 60 officers (more if required)." Fox asserts that "implicit in this provision is the requirement that the number of officers used will

- 185 - be selected in good faith based on the projected number of concert attendees based on advance [ticket] sales." Fox claims that 60 police officers would have been a reasonable number based on the small number of tickets sold by July 3, 1980. Because hiring 60 police officers would have cost him only $10,560, Fox claims that the City owes him $21,960.78, the amount he paid the additional 89 officers. Count V. This count is a claim against Mathias, Deese, and Johnson for violating Code §§ 18.2-499 and -500. Fox claims that these defendants, based upon the previously alleged facts, "combined, associated, agreed, mutually undertook and/or concerted together for the purpose of wilfully and maliciously injuring [him] in his trade, reputation, business and/or profession." For this, Fox seeks treble compensatory damages of $1,912,500 and $500,000 in punitive damages. Count VI. In Count VI, Fox claims that Mathias, Deese, and Johnson "conspired to maliciously and intentionally interfere with [Fox's] contract rights with the City . . . and his prospective economic advantage." In this count, Fox seeks compensatory damages of $637,500 and punitive damages of $500,000. Count VII. This count is a claim against the City for breach of contract. Fox alleges that under paragraph 12 of the June 10, 1980 written contract, the City had "complete and sole supervision of the sale of all tickets," that the City was obligated "to place tickets on sale in a reasonable manner and at a reasonable time prior to the . . . concert," and that "the agents and servants of the City . . . intentionally, maliciously and wilfully delayed the offering of tickets for sale until approximately three days prior to the concert, in violation of . . . the contract." In this count, Fox claims compensatory damages of $637,500. Count VIII. Count VIII is also a contract claim against the City. Pursuant to the contract, the City received $53,885 in ticket sales for the concert. The City also received deposits from Fox in the amount of $19,445. Fox alleges that the City is holding $73,330 of his money. Fox concedes, however, that he is indebted to the City in the sum of $33,951.59. Thus, he asserts that the City owes him $39,378.41. Fox has demanded payment of this sum, but the City has refused to pay it.

II. MISJOINDER OF PARTIES AND CAUSES OF ACTION A. Parties Plaintiff One of the grounds relied upon by the trial court for dismissing Fox's amended motion for judgment was the nonjoinder of parties plaintiff. All defendants asserted this defense. Fox originally alleged under oath in a motion for judgment filed in a prior nonsuited action that he was "the principal planner and promoter" of the concert and that his "associates and partners in the promotion of this event included Theodore Powell, John H. Martin and Alan Drewry." In the present action, however, Fox alleges

- 186 - only that he was "the principal planner and promoter" and makes no reference to "associates" or "partners." Defendants contend that because Fox previously alleged under oath that he had "partners," he could not subsequently "maintain that he had no partners" and, therefore, the trial court properly dismissed this action for "failure of Fox's partners to join in as plaintiffs." We do not agree. In his amended motion for judgment, Fox does not "maintain that he had no partners." He alleges, without more, that he "was the principal planner and promoter of the 'Mardi Gras' concert." This allegation is not necessarily inconsistent with the allegations contained in the prior motion for judgment. Whether the court should have dismissed the action based on nonjoinder of parties plaintiff is answered by Code § 8.01-5(A) and Rule 3:9A. Code § 8.01-5(A) provides as follows: No action or suit shall abate or be defeated by the nonjoinder or misjoinder of parties, plaintiff or defendant, but whenever such nonjoinder or misjoinder shall be made to appear by affidavit or otherwise, new parties may be added and parties misjoined may be dropped by order of the court at any time as the ends of justice may require. [The Court then quoted Rule 3:12, and stated:] Clearly, the alleged nonjoinder of parties plaintiff was not a proper ground for dismissing this action. Indeed, if the defendants had desired to pursue the matter, they and the trial court should have followed the procedures set forth in the statute and the rule for determining whether the purported partners were necessary parties. B. Parties Defendant and Causes of Action Another related ground relied upon by the trial court for dismissing Fox's amended motion for judgment was the alleged misjoinder of parties defendant and causes of action, a ground that all defendants asserted. On appeal, the defendants contend that Fox "is making claims against some of the defendants jointly as well as against them severally, and further that he is pursuing counts against different defendants for separate, independent acts." The defendants rely primarily upon Norfolk Bus Term. v. Sheldon, 188 Va. 288, 49 S.E.2d 338 (1948). In Norfolk Bus Term., we stated that "under our system of pleading, unless the acts of independent tort-feasors concur in producing a single indivisible injury or damage, they may not be sued jointly in a single action." Id. at 296, 49 S.E.2d at 341. Norfolk Bus Term., however, was decided before the 1954 enactment of Code § 8.01-272 and before the 1974 enactment of Code § 8.01- 281. Code § 8.01-272 provides in pertinent part: In any civil action, a party may plead as many matters, whether of law or fact, as he shall think necessary. A party may join a claim in tort with one in contract provided that all claims so joined arise out of the same transaction or occurrence. The court, in its discretion, may order a separate trial for any claim. Code § 8.01-281 provides in pertinent part: A. A party asserting . . . a claim . . . may plead alternative facts and theories of recovery against alternative parties, provided that such claims . . . so joined arise out of the same transaction or occurrence. . . .

- 187 - B. The court may, upon motion of any party, order a separate trial of any claim . . . and of any separate issue or of any number of such claims . . . .

In addition, Rule 1:4(k) provides in pertinent part:

A party asserting . . . a claim . . . may plead alternative facts and theories of recovery against alternative parties, provided that such claims . . . arise out of the same transaction or occurrence. When two or more statements are made in the alternative and one of them if made independently would be sufficient, the pleading is not made insufficient by the insufficiency of one or more of the alternative statements. A party may also state as many separate claims . . . as he has regardless of consistency and whether based on legal or equitable grounds.

The foregoing statutes and rule represent a radical departure from the common-law pleading rule stated in Norfolk Bus Term. See also Tanner v. Culpeper C. Co., 117 Va. 154, 83 S.E. 1052 (1915); McMullin v. Church, 82 Va. 501 (1886). We conclude that a fair reading of the amended motion for judgment shows that Fox has pleaded alternative theories of recovery against the same group of defendants and that the claims arise out of the same transaction or occurrence. Moreover, a trial court has the discretion to order a separate trial of any claim to attain the ends of justice. Code § 8.01-272. The trial court, therefore, erred in dismissing Fox's action on this ground. . . . III. ESTOPPEL In his previous motion for judgment filed in the nonsuited action, Fox alleged that "Deese convened, attended and acted as a principal party on behalf of the City . . . in a series of meetings with [Fox] and others beginning in May, 1980, and continuing into the Autum [sic] of 1980." In the amended motion for judgment filed in the case at bar, however, Fox asserts that when Deese committed the alleged intentionally tortious acts, Deese was acting outside the scope of his employment with the City. Deese therefore contends, and the trial court ruled, that Fox is estopped from proceeding against him in his individual capacity because Fox has assumed inconsistent positions. In a similar vein, Mathias contends that Fox did not allege sufficient facts in Count II of the amended motion for judgment to establish a cause of action for misrepresentation against Mathias in his individual capacity. Mathias argues that "[a] review of all allegations in Count II establishes that [he] was dealing with Fox only as a City . . . official." To support this argument, Mathias points to two allegations in the amended motion for judgment. One allegation states that Mathias "was Acting Director of the Department of Community Facilities . . . until on or about June 23, 1980." The other allegation states that "Mathias was acting in his individual capacity and not within the scope and course of his employment." Mathias asserts that these two allegations are "clearly inconsistent and contradictory." We cannot say that these allegations against Deese and Mathias are irreconcilably inconsistent. Conceivably, Fox could present evidence to establish that although Deese

- 188 - and Mathias appeared to act for the City, they in fact had left the scope of their employment and had acted on their own accounts. Moreover, the determination whether Mathias and Deese were acting outside the scope of their employment is not necessarily the sole test for adjudicating their individual liability. Even if they acted within the scope of their employment, they can be held liable for an intentional tort. See Elder, 208 Va. at 19, 155 S.E.2d at 372-73. Fox claims in Count I that Deese committed the intentional tort of fraud, and he asserts in Count II that Mathias intentionally misrepresented facts about the ticket sales and the City's pay policy. We hold, therefore, that the trial court erred in sustaining the defendants' pleas of estoppel. . . . B. Proximate Cause. Deese also contends that the alleged misrepresentation was not the proximate cause of Fox's actual economic loss of $137,500. Deese points to paragraph 41 of the amended motion for judgment, in which Fox asserts "[t]hat had . . . Mathias placed the tickets on sale as promised, the concert would have been a success and [Fox] would have realized $500,000.00 in profit." Deese asserts that, under Fox's theory of the case, it was Mathias' intervening tortious conduct that caused Fox's loss, not Deese's alleged misrepresentation. Fox counters with the argument that had Deese made a full disclosure of the requirements, there would have been no contract in the first instance and, thus, Fox would not have sustained a loss. Fox asserts that he does not seek relief in Count I for lost profits, but only recovery of his actual economic loss. As previously noted, "[a] party may . . . state as many separate claims . . . as he has regardless of consistency." Rule 1:4(k). Moreover, proximate cause is ordinarily an issue for the fact finder, S & C Company v. Horne, 218 Va. 124, 131, 235 S.E.2d 456, 461 (1977), and a plaintiff need not show that an act is the only cause of his damages, Schools v. Walker, 187 Va. 619, 629, 47 S.E.2d 418, 423 (1948). . . . Because Fox failed to allege that the defendants' interference induced or caused the breach of Fox's contract with the City, the trial court properly sustained this ground of the defendants' demurrers. As previously noted, however, the trial court sustained all grounds of the demurrers "without leave to amend." Fox, therefore, never was afforded the opportunity to move to amend. "Leave to amend [a pleading] shall be liberally granted in furtherance of the ends of justice." Rule 1:8. We conclude that the trial court abused its discretion by not affording Fox the opportunity to amend. On remand, Fox, upon proper motion, should be permitted to amend. . . For the foregoing reasons, we will reverse the judgment of the trial court and remand the entire case for further proceedings consistent with the views expressed herein.

- 189 - Multiple Claims Problems

POWERS v. CHERIN 249 Va. 33; 452 S.E.2d 666; 1995

JUSTICE COMPTON delivered the opinion of the Court: The broad question in this appeal is whether a cause of action for damages resulting from the negligent operation of an automobile may be joined in the same motion for judgment with a cause of action for damages resulting from medical malpractice. In February 1990, appellant Heather Powers was injured in the City of Chesapeake while riding in an automobile that was struck by a motor vehicle operated by Joseph C. Pope. Subsequently, she filed an action for damages against Pope seeking recovery for her personal injuries, alleging Pope's negligent operation of his vehicle caused her damages. Later, plaintiff was permitted to amend her motion for judgment by adding appellee Jack I. Cherin, D.M.D., as a party defendant. In a two-count amended motion for judgment, plaintiff sought recovery against Pope for damages resulting from the automobile accident in one count and recovery against Dr. Cherin for damages resulting from medical malpractice in the other count. Defendant Cherin demurred to the amended motion asserting "that it misjoins parties and causes of action." The trial court sustained the demurrer, ruling that the proceeding "constitutes two separate causes of action and, therefore, the proposed joinder would not be proper." The plaintiff appeals from the December 1993 order dismissing the action as to defendant Cherin. Although he objected to Cherin's dismissal, Pope is not a party to this appeal. Initially, we shall dispose of a procedural matter. On appeal, for the first time, plaintiff argues that misjoinder of parties cannot be raised by demurrer, citing Baird v. Tyler, 185 Va. 601, 606, 39 S.E.2d 642, 645 (1946). Under Code § 8.01-5, misjoinder of parties should be raised by a motion to drop the improperly joined parties, not by a demurrer. Riverside Cotton Mills v. Lanier, 102 Va. 148, 159, 45 S.E. 875, 875 (1903). But plaintiff's reliance on this defect is procedurally barred because the issue was not raised below. Rule 5:25. Moreover, any error in this regard is utterly harmless because the trial court based its decision, not on misjoinder of parties, but on misjoinder of causes of action, which may be raised by demurrer. Gary v. Abingdon Publishing Co., 94 Va. 775, 27 S.E. 595 (1897). A discussion of the merits of this appeal must be preceded by a summary of the allegations of the amended motion for judgment. Of course, a demurrer tests the legal sufficiency of the pleading. And, contrary to the plaintiff's assertion, "the trial court, and this Court upon review, are confined to the facts alleged when analyzing the pleading; no consideration properly can be given to additional facts that may be asserted on brief or during oral argument." Elliott v. Shore Stop, Inc., 238 Va. 237, 239-40, 384 S.E.2d 752, 753 (1989). In the first count of the amended motion for judgment, the plaintiff, after setting forth the basic facts of the accident, charged Pope with careless, reckless, and negligent

- 190 - conduct that caused her "severe and permanent injuries" and "great pain of body and mind." Further, plaintiff alleged she had incurred medical expenses and had sustained lost wages due to Pope's negligence. In the second count, plaintiff incorporated all the allegations made in the first count. Additionally, plaintiff alleged that defendant Cherin was a duly licensed health care provider who undertook to treat her for injuries sustained in the automobile accident. She asserted that Dr. Cherin "employed improper treatment for the [temporomandibular joint] disease and injury" from which she suffered; "failed to properly diagnose the dental and TMJ disorder;" prescribed "splint therapy" for her that "was contraindicated and unsafe;" "failed to prevent the development of, diagnose and treat the open bite defect" she suffered; and "prescribed, recommended and administered treatment . . . which had no therapeutic value and was detrimental" to her. In the second count, the plaintiff also alleged that, as a result of Dr. Cherin's negligence, the injuries sustained in the automobile accident "were aggravated" and that she had suffered "severe and permanent injuries," incurred medical expenses, and sustained wage losses. In the final paragraph of the amended motion, she demanded judgment "against the defendants, Joseph C. Pope and Jack I. Cherin, D.M.D. in the amount of ONE MILLION DOLLARS, jointly and severally, with interest thereon and the costs expended in this action." On appeal, the plaintiff contends the trial court erred in sustaining defendant's demurrer. She says that a "plaintiff may plead as many matters as she deems necessary and may join a claim in tort with one in contract, provided that all claims arise out of the same transaction or occurrence," citing Code § 8.01-272. Relying on Fox v. Deese, 234 Va. 412, 423, 362 S.E.2d 699, 705 (1987), and inapposite federal authority, plaintiff argues it is therefore "error for a trial court to dismiss a defendant on the ground of misjoinder merely because the motion for judgment states two separate causes of action." Similarly, and citing Code § 8.01-281, she argues that "a plaintiff may plead alternative theories of recovery against alternative defendants, provided that all claims arise out of the same transaction or occurrence." She says, "Where a fair reading of the motion for judgment shows that the plaintiff has pled claims for relief which arise out of the same transaction or occurrence, it is error for the trial judge to dismiss the plaintiff's action on the ground of misjoinder of parties defendant." Although the plaintiff accurately has identified the issue to be decided in this appeal, we do not agree with her argument. The crucial issue is whether the claims set forth in the two counts of the amended motion for judgment arise out of the same transaction or occurrence, within the meaning of the applicable statutes.

- 191 - Code § 8.01-272, as pertinent, provides: "In any civil action, a party may plead as many matters, whether of law or fact, as he shall think necessary. A party may join a claim in tort with one in contract provided that all claims so joined arise out of the same transaction or occurrence." Code § 8.01-281(A), as pertinent, provides: "A party asserting either a claim, counterclaim, cross-claim, or third-party claim or a defense may plead alternative facts and theories of recovery against alternative parties, provided that such claims, defenses, or demands for relief so joined arise out of the same transaction or occurrence." Enacted in 1977, § 8.01-272 overruled the long-standing prohibition against joinder of tort and contract claims found in Virginia case law; § 8.01-281 was adopted at the same time to grant a party asserting any claim or defense the right to join alternative claims or defenses, that is, to present alternative statements of the facts or alternative legal theories. Revision of Title 8 of the Code of Virginia, Report of the Virginia Code Commission to The Governor and The General Assembly of Virginia, 1 House & Senate Documents, H. Doc. No. 14 at 185, 191 (1977). Both enactments are conditioned, however, upon the requirement that the claims joined must "arise out of the same transaction or occurrence," statutory language so plain and unambiguous that it requires no interpretation. Manifestly, the plaintiff's claim against Pope for negligent operation of an automobile does not arise from the same transaction or occurrence as the plaintiff's claim against Dr. Cherin for medical malpractice. Rather, the amended motion for judgment sets forth two transactions or occurrences: first, the negligent operation of a motor vehicle by Pope resulting in an accident; and, second, the negligent medical treatment of plaintiff at a later date by Dr. Cherin resulting in injury. The difficulty with allowing joinder of these causes of action is demonstrated when one focuses on the fact that the plaintiff seeks a joint and several recovery for separate injuries caused in the motor vehicle accident, for which Dr. Cherin cannot be liable, and for separate injuries for medical malpractice, for which Pope cannot be liable. It is true that plaintiff alleges an aggravation of her original injury by the negligent treatment of Dr. Cherin; Pope can be held liable for this aggravation, assuming the plaintiff used reasonable care in selecting the physician to treat her accident-related injury. Corbett v. Clarke, 187 Va. 222, 224-25, 46 S.E.2d 327, 328 (1948). But Dr. Cherin cannot be liable for the injuries sustained in the motor vehicle accident caused by Pope's negligence. Furthermore, plaintiff asserts separate and distinct injuries caused by Dr. Cherin in prescribing unsafe splint therapy and in failing to prevent the development of, and failing to diagnose and treat an open bite defect. Pope cannot be liable for these distinct injuries resulting from malpractice that are not mere aggravation. In other words, the separate and distinct malpractice injuries do not arise out of the same transaction or occurrence as the automobile accident. See Washington v. Williams, 215 Va. 353, 357, 210 S.E.2d 154, 157 (1974) (release of original tort-feasor not effective to release treating physicians for separate and distinct wrongs constituting malpractice). Fox v. Deese, supra, relied on by plaintiff, is not controlling. There, a plaintiff pleaded alternative theories of recovery against several defendants in connection with the scheduling of an outdoor concert at a public facility. Unlike this case, the claims in Fox arose out of the same transaction or occurrence. Accordingly, we held that the

- 192 - parties and causes of action had been properly joined in a single amended motion for judgment. 234 Va. at 423, 362 S.E.2d at 705. Consequently, because there was a fatal misjoinder of causes of action, we hold that the trial court properly sustained the demurrer. Thus, the judgment dismissing Dr. Cherin as a party defendant will be Affirmed.

- 193 - H. Misnomer.

Amendment to correct the name of the defendant is permitted under Code § 8.01-6. Amendment may take place at any stage of the litigation, prior to judgment. See Leckie v. Seal, 161 Va. 215, 170 S.E. 844 (1957). However, the statute of limitations may bar the suit unless the claim relates back to the date of filing, prior to expiration of the statute. A 1990 amendment adopts an approach similar to that in use for many years under Fed.R.Civ.P. 15. Under this approach an amendment is deemed to relate back to the date the complaint was filed if (1) the claim asserted in the amended pleading arose out of the same conduct, transactions or occurrence set forth in the initial pleading and (2) within the limitation period prescribed for commencing the action against the party to be brought in by amendment, the party received such notice of the institution of the action that he will not be prejudiced in defending against the claim and (3) he knew or should have known that, but for a mistake concerning the identity of the person to sue, the action would have been brought against him initially. See § 8.01-6, set forth in Chapter 8 at section M, Amendment of Pleadings.

ROCKWELL v. ALLMAN 211 Va. 560, 179 S.E.2d 471 (1971) PER CURIAM. On December 15, 1964 Arthur H. Rockwell received personal injuries when a truck he was driving collided with a car operated by Jacie Arbell Underwood Shotwell in Roanoke county. Mrs. Shotwell died as a result of injuries she sustained in the accident. Information supplied by the Division of Motor Vehicles and State police indicated that Mrs. Shotwell resided in the City of Roanoke. Upon motion of Rockwell the Circuit Court of the City of Roanoke, pursuant to the provisions of Code § 64-124 (now § 64.1- 131), appointed the City Sergeant, Kermit E. Allman, Administrator of Mrs. Shotwell's estate. On November 14, 1966 Rockwell filed in that court a motion for judgment against Allman seeking damages for his injuries. Allman filed a responsive pleading thereto. On July 9, 1968, the date set for trial, counsel for Allman introduced evidence that showed Mrs. Shotwell resided in "a mansion house" owned by her in Botetourt county at the time of her death; that on December 21, 1964 Corldeen Frances Berry and Barbara Jean Higgins, daughters of Mrs. Shotwell, qualified as administratrices of her estate in the Circuit Court of Botetourt County, and that the administratrices' final account was filed and approved on August 16, 1965. On July 30, 1968 Allman filed a motion for summary judgment on the ground that his appointment as administrator was void because the court lacked jurisdiction to make the appointment. On the same day Rockwell moved the court to permit him, pursuant to [then applicable Code provisions and rules], to amend his motion for judgment "to correct a misnomer" by substituting the administratrices as the party defendant in lieu of Allman. The trial court overruled Rockwell's motion to amend and granted Allman's motion for summary judgment.

- 194 - The narrow issue presented in this appeal is whether the naming of Allman as the party defendant was a misnomer. Under the facts of this case there was no misnomer. Allman's appointment was void. Andrews v. Avory, 55 Va. (14 Gratt.) 229, 236 (1858). Any judgment rendered against him as Mrs. Shotwell's administrator would be a nullity. The actual administratrices whom Rockwell sought to substitute for Allman as party defendant bear no relation of interest to Allman and were never served with process. A misnomer is a mistake in name, but not person. Here the wrong person was named and it cannot be corrected . . . by labelling it a misnomer. Our holding in Jacobson v. Southern Biscuit Company, 198 Va. 813, 97 S.E.2d 1 (1957), is not to the contrary. There we permitted an amendment to the pleadings because the right party was before the court "although under a wrong name". Here the party before the court, Kermit E. Allman, Administrator, was not the right party because his appointment as administrator was void.

- 195 - I. John Doe Plaintiffs and Defendants.

John Doe Pleadings in Unknown Motorist Cases. In Va. Code § 38.2-2206(G), legislation passed in 1999, the General Assembly provided that the bringing of an action against an unknown owner or operator as a John Doe will be effective to toll the statute of limitations for purposes of bringing an action against the actual owner or operator who caused the injury or damages until his identity becomes known. The legislation provides an outside limit of three years from the filing of the action against the unknown owner or operator as John Doe for the commencement of any action against an identified owner or operator who caused the injury or damages. Many a litigator has the instinct to name a "John Doe" defendant where the identity of one or more of the tortfeasors is unknown. However, Virginia, unlike some other states, has no general statute tolling the statute of limitations upon the filing of actions against John Does. Case and Statutory Developments on Suing “Anonymously.” The Supreme Court decided issues concerning discovery relating to a suit brought in another state by an “anonymous” plaintiff in AOL v. Anonymous Publicly Traded Company, a decision set forth at the end of Chapter 19 of these materials. As part of that decision the Court spoke negatively about the freedom of a plaintiff to commence a Virginia action anonymously, a practice that is infrequent but has always seemed sensible where, for example, the youthful victim of abuse could suffer unwanted publicity from being named personally. The General Assembly, responding to a proposal from the Boyd-Graves Conference on Virginia Procedure, recently enacted the following statute. Note that under the statute, it is assumed that a plaintiff can plead anonymously – without prior permission – and that the issue is the terms or conditions under which the actual party identity must be identified: Code § 8.01-15.1. Anonymous plaintiff; motion for identification; factors to be considered by court A. In any legal proceeding commenced anonymously, any party may move for an order concerning the propriety of anonymous participation in the proceeding. The trial court may allow maintenance of the proceeding under a pseudonym if the anonymous litigant discharges the burden of showing special circumstances such that the need for anonymity outweighs the public's interest in knowing the party's identity and outweighs any prejudice to any other party. The court may consider whether the requested anonymity is intended merely to avoid the annoyance and criticism that may attend any litigation or is to preserve privacy in a sensitive and highly personal matter; whether identification poses a risk of retaliatory physical or mental harm to the requesting party or to innocent nonparties; the ages of the persons whose privacy interests are sought to be protected; whether the action is against a governmental or private party; and the risk of unfairness to other parties if anonymity is maintained. B. If the court initially permits a party to proceed anonymously, the issue of the propriety of continued anonymous participation in the proceedings may be raised at any stage of the litigation when circumstances warrant a

- 196 - reconsideration of the issue. In all cases, all parties have the right to know the true identities of all other parties under such provisions of confidentiality as the court may deem appropriate. C. If the court orders that the anonymous litigant be identified, the pleadings and any relevant dockets shall be reformed to reflect the party's true name, and the identification shall be deemed to relate back to the date of filing of the proceeding by the anonymous party. D. In any legal proceeding in which a party is proceeding anonymously, the court shall enter appropriate orders to afford all parties the rights, procedures and discovery to which they are otherwise entitled.

Notes on Insurance and Insurers

Suing Insurers Directly. Generally an insurer should not be named (to avoid adverse jury reaction). However, the insurer providing "uninsured motorist" coverage to a driver who is injured may be named. Willard v. Aetna Casualty & Surety, 213 Va. 481, 193 S.E.2d 776 (1973). Insured's Obligations. In Virginia Farm Bureau Mutual Ins. Co. v. Gibson, 236 Va. 433, 374 S.E.2d 58 (1988) the Supreme Court held that a plaintiff who sues both the insured and an uninsured defendant voids application of the policy coverage if he enters into a settlement with the insured defendant without consent of the uninsured motorist carrier.

- 197 - J. Wrongful Death.

The wrongful death statute, Code §§ 8.01-50 through -56, reflects the modern rejection of the common law. The statute permits an action by a personal representative, not specially appointed. A non-resident personal representative must be backstopped by appointment of a resident representative as well. Code § 26-59. The personal representative brings such cases essentially as trustee for the beneficiaries, who are specified by statute. § 8.01-50.

Damage Categories 1 Sorrow, mental anguish, and solace, society companionship and guidance, the kindly offices the deceased would have provided to the beneficiaries had s/he lived. 2 Income/services lost to the beneficiaries on account of the death. 3 Medical expenses of the deceased relating to the accident and death. 4 Funeral expenses. 5 Punitive damages (recoverable if the defendant's conduct was willful, wanton or reckless to the extent of conscious disregard for the safety of the deceased)

Beneficiaries Definitions: "Issue" means kids and their descendants (grandchildren, etc). "Spouse" you know. "resident family members dependent upon the deceased" means members of the family out a ways, but who lived with the deceased and were dependent on him or her for support. Granny, cousin Billy Bob, Great aunt Tilly, etc. Rules of distribution, in descending order of how it goes (i.e., we work our way down the list to the first one that is applicable, and that controls): 1 If there are issue, to the spouse, issue, and resident family members dependent upon the deceased. 2 If there are no issue, to the spouse, parents, and resident family members dependent upon the deceased. 3 If there are no issue and no spouse, to the parents, siblings, and resident family members dependent upon the deceased. 4 If there are none of the above (no issue, no spouse, no parents, no siblings, and no resident family members dependent upon the deceased), to the estate.

So if category 2 works (we find at least one living parent of the deceased), we do not go to category 3 and thus the siblings will not be beneficiaries in our case.

- 198 - CASSADY v. MARTIN 220 Va. 1093, 266 S.E.2d 104 (1980)

JUSTICE THOMPSON delivered the opinion of the Court. [The decedent, a mentally retarded 21-year-old, was killed by a car driven by appellant. The decedent's mother filed this damages suit for wrongful death under Code § 8.01-50 and sought to establish an infant, Richard Dean Gilley, as the child of the decedent and the only statutory beneficiary of the first class under Code § 8.01-53. The mother of the infant had been married to Allen Wayne Gilley for two years at the time of the child's birth but had not lived with him for a "year or two" and had moved in with the decedent approximately one and one- half years before the infant was born. She admitted spending one night sometime during this period with her husband. The decedent had signed a sworn statement of paternity and had acknowledged the child as his own on several occasions. The defendant having admitted liability, the issues at trial focused on establishing the beneficiary under Code § 8.01-53 and the amount of damages. An economist testified as an expert witness on the damage issue and projected decedent's lost lifetime income to be $ 146,577 based on the minimum wage, a 40- hour week for a 50-week year and the assumption that decedent would attain age 65. Decedent's only employment commenced five days after the child was born and continued for only eight weeks during which time he missed seven workdays. He contributed $ 33 to support the child. The Trial Court ruled as a matter of law that the child was the son of the decedent, and the Jury returned a verdict for the plaintiff, setting damages at $ 50,000.]

V. EXPERT TESTIMONY [Code § 8.01-52 provides in pertinent part: Amount of damages.--The jury or the court, as the case may be, in any such action under § 8.01-50 may award such damages as to it may seem fair and just. The verdict or judgment of the court trying the case without a jury shall include, but may not be limited to, damages for the following: . . . . 2. Compensation for reasonably expected loss of (I) income of the decedent and (ii) services, protection, care and assistance provided by the decedent;. . . . Competent expert testimony shall be admissible in proving damages recoverable under 2 above.] In this case, we feel that the evidence as to reasonably expected loss of decedent's income was inadmissible as a matter of law as being too speculative. Cf. Edward, The Economist as an Expert Witness in Personal Injury and Wrongful Death Cases, 3 Va. B.A.J. 16 (1977). This decedent had a mental age of nine and was a functional illiterate who could only write his name. The decedent's only employment noted in the record commenced five days after the child was born, and continued for only eight weeks, during which time he lost six or seven days. His mother was of the opinion that he only worked half days because of sickness. There was no showing of the effect of the accident of December 18 on his health, although he was scheduled to return to work two days after his death.

- 199 - VI. DAMAGE INSTRUCTION As the trial court indicated, Instruction No. 1 was a literal tracking of Code § 8.01- 52 and for that reason he thought was free of objection.14 . . . [T]he general objective of the wrongful death statute has not been changed and was stated in Wilson v. Whittaker , 207 Va. 1032, 1036, 154 S.E.2d 1248 128 (1967): "The object of the statute is to compensate these beneficiaries for their loss occasioned by the decedent's death." The words "damage" and "loss" clearly indicate a damage and loss sustained by someone, and we think the loss means the loss to the statutory beneficiary in this case. Certainly, the intent of the statute is not to accumulate an estate for the decedent, Conrad v. Thompson, 195 Va. 714, 80 S.E.2d 561 (1954), but to compensate for a loss suffered by those entitled to recover, and the instruction should be so modified. For the foregoing reasons the judgment of the trial court is reversed and the case is remanded for a new trial on the issues of paternity and damages only.

14 53 "The Court instructs the jury, that from the evidence and the other instructions of the Court, the jury may award such damages as to it may seem fair and just to Richard Dean Gilley, who is the son of the decedent, Ricky Dean Martin. The Court further instructs the jury, that your verdict shall include, but may not be limited to, damages for the following: (1) Such sum as to you may seem fair and just by way of sorrow, mental anguish, and solace which may include loss of society, companionship, comfort, guidance, kindly offices of the and advice of the decedent, which may have resulted. (2) Compensation for reasonably expected loss of (i) income of the decedent, and (ii) services, protection, care and assistance provided by the decedent. (3) Funeral expenses of the decedent in the amount of $2,350.14."

- 200 - Standing in Wrongful Death

Standing to Sue in Wrongful Death Cases. In Fowler v. Winchester Medical Center, 266 Va. 131, 580 S.E.2d 816 ( 2003), after the wife's husband died intestate – allegedly as a result of medical malpractice – she was appointed administrator of his estate in West Virginia. Two years later, after the estate was closed, she initiated a wrongful death action in Virginia against the healthcare providers. The Supreme Court held that at the time the wife filed the action, she had not qualified as a personal representative in Virginia under Code §§ 26-59 and 8.01-50(B) and her prior qualification in West Virginia had terminated. As a result, the wife did not have standing to maintain the wrongful death action, the statute of limitations was not tolled by her suit here under Code § 8.01-244(B). Thus the trial court did not err in dismissing her motion for judgment with prejudice. See also Harmon v. Sadjadi, 273 Va. 184, 639 S.E.2d 294 (2007)(a Virginia filing by an out-of-state representative, not qualified in Virginia, not only did not toll the running of the statutory period of limitations, but it also did not trigger the appointment one-year period made available under Code §8.01- 229 for appointment of a personal representative). McDaniel v. North Carolina Pulp Co., 198 Va. 612, 95 S.E.2d 201 (1956), which had given an out-of-state representative "real party in interest" status was overruled in Harmon as being an aberration from the normal rule that only qualification in Virginia can empower a representative to act here. See also Johnston Mem. Hosp. v. Bazemore, 277 Va. 308, 672 S.E.2d 858 (2009)/

- 201 - Approval of Settlements

In Ramey v. Bobbitt, 250 Va. 474, 463 S.E.2d 437 (1995), the Virginia Supreme Court held that Code § 8.01-55 requires, before any compromise of a wrongful death claim or action will be allowed, that the compromise must have the approval of the court wherein any such action has been brought. Code § 8.01-35.1(C) makes releases and covenants not to sue in respect to tort liability subject to the provisions of Code § 8.01-55. Therefore, when a circuit court approves a compromise settlement under Code § 8.01-55, the terms of the release on which it is based likewise are subject to the court's approval. As a consequence, those portions of a release that are not made part of a wrongful death compromise settlement approved by a circuit court are not binding on the parties to the from the death of the decedent. In Ramey, since the court order of the other circuit court approved only the release of the driver of the car and her insurer from liability for the accident, the trial court did not err in denying the defendants' plea of accord and satisfaction. @@@ PERREAULT v. FREE LANCE-STAR 2008 Va. LEXIS 96 (September 12, 2008)

[In four wrongful death actions involving the administration during open-heart surgery of an allegedly improperly formulated or contaminated cardioplegic solution, the personal representatives entered into mediation with a pharmacy services defendant that resulted in compromise agreements which recited a concern of all parties to keep the terms of settlement confidential. Certain of the representatives applied to the circuit court under Code § 8.01-55 for approval of the respective settlements by making oral motions in a closed, in camera hearing. The records do not reflect issuance of any praecipe for, or notice to any parties of, the in camera hearing, which was not transcribed. The circuit court initially entered orders approving the compromise settlements in these cases. Two newspapers objected to the approval process, and were later allowed to intervene; they argued that failure to require written petitions setting out the terms of the compromises, including the amount of financial compensation to be paid, was inconsistent with the requirements of Code § 8.01-55. The circuit court entered an order requiring certain of the representatives to file petitions stating the terms of each settlement and the reasons therefor. The order contemplated a hearing on whether the petitions would remain under seal. Ultimately the court entered orders in all four cases ruling that Code § 8.01-55 required the personal representatives to file petitions for approval of the compromise settlements which must include all of the terms and conditions of each settlement. The court further ruled that the settling parties failed to meet the burden to establish a compelling reason sufficient to overcome the presumption of openness of such settlement information, and it denied motions to permit use of redacted copies of the settlement agreements to satisfy the requirements].

JUSTICE KOONTZ announced the opinion of the Court: . . . Code § 8.01-55 in relevant part, provides that: The personal representative of the deceased may compromise any claim to damages arising under or by virtue of § 8.01-50, including claims under the provision of a liability insurance policy, before or after an action is brought,

- 202 - with the approval of the court in which the action was brought, or if an action has not been brought, with the consent of any circuit court. Such approval may be applied for on petition to such court, by the personal representative, or by any potential defendant, or by any interested insurance carrier . . . . The petition shall state the compromise, its terms and the reason therefor. The court shall require the convening of the parties in interest . . . . The parties in interest shall be deemed to be convened if each such party (i) endorses the order by which the court approves the compromise or (ii) is given notice of the hearing and proposed compromise as provided in § 8.01-296 if a resident of the Commonwealth or as provided in § 8.01-320 if a nonresident, or is otherwise given reasonable notice of the hearing and proposed compromise as may be required by the court. (Emphasis added.) The settling parties essentially contend that nothing in Code § 8.01-55 requires the "petition" made to the court for approval of a compromise of a wrongful death claim to be in writing or to otherwise require disclosure of the financial terms of that compromise in a public record. We disagree. In resolving this issue, we consider the language of Code § 8.01-55 under the settled principle of statutory construction that courts are bound by the plain meaning of statutory language. Hicks v. Mellis, 275 Va. 213, 218, 657 S.E.2d 142, 144 (2008); Young v. Commonwealth, 273 Va. 528, 533, 643 S.E.2d 491, 493 (2007); Alliance to Save the Mattaponi v. Commonwealth, 270 Va. 423, 439, 621 S.E.2d 78, 86-87 (2005). Under this principle, when the language of a statute is plain and unambiguous, courts may not interpret that language in a manner effectively holding that the General Assembly did not mean what it actually stated. Hicks, 275 Va. at 218, 657 S.E.2d at 144; Young, 273 Va. at 533, 643 S.E.2d at 493; Alcoy v. Valley Nursing Homes, 272 Va. 37, 41, 630 S.E.2d 301, 303 (2006). Initially, we note that in enacting Code § 8.01-55, the General Assembly required that "settlements of wrongful death claims must be approved by the courts." Shenandoah Publishing, 235 Va. at 260, 368 S.E.2d at 256. In plain and unambiguous language, Code § 8.01-55 requires that before a circuit court may approve any settlement of a wrongful death claim, the statutorily designated party must apply for such approval by petition to the court. The usual and accepted meaning of "petition" is "[a] formal written request presented to a court or other official body." Black's Law Dictionary 1182 (8th ed. 2004) (emphasis added). Moreover, Code § 8.01-55 is equally unambiguous in its requirement that "[t]he petition shall state the compromise, its terms and the reason therefor." (Emphasis added.) Common sense dictates that the most significant of the "terms" of any compromise settlement of a wrongful death claim include the monetary provisions in consideration of which the party with the right to seek damages is compromising its right to sue for those damages. Clearly, the settling parties' contention that Code § 8.01-55 does not require a written petition to the circuit court or that such petition need not state the financial terms of the compromise settlement is not supported by the plain meaning of the language of the statute. Furthermore, in Ramey v. Bobbitt, 250 Va. 474, 481, 463 S.E.2d 437, 441 (1995), we held that "[t]hose portions of a release that are not made part of a wrongful death compromise settlement approved by a circuit court [under Code § 8.01-55] are not binding on the parties to the release." Accordingly, if the terms of a settlement were not made express in the petition filed under Code § 8.01-55 or were not otherwise made a

- 203 - part of the record, there would be no definite basis upon which the court would later be able to determine what the parties had bound themselves to in the compromise settlement if a dispute subsequently arose regarding compliance with the settlement. For these reasons, we hold that the circuit court did not err in construing Code §8.01-55 to require a party seeking approval of a compromise settlement of a wrongful death claim to file in the court a written petition that includes the complete and unredacted terms of the compromise settlement. We now turn to the settling parties' contention that the circuit court erred by failing to give proper effect to the confidentiality provisions of Code § 8.01-581.22. The resolution of this contention necessarily invokes the interplay among the applications of Code §§ 8.01-55, 8.01-581.22 and 17.1-208. In relevant part, Code § 17.1-208 provides that: Except as otherwise provided by law, any records and papers of every circuit court that are maintained by the clerk of the circuit court shall be open to inspection by any person and the clerk shall, when requested, furnish copies thereof, except in cases in which it is otherwise specially provided. In Shenandoah Publishing, we identified the "judicial records" that ordinarily come within the ambit of this statute as "the pleadings and any exhibits or motions filed by the parties and all orders entered by the trial court in the judicial proceedings leading to the judgment under review." 235 Va. at 257, 368 S.E.2d at 255. The petition required by Code § 8.01-55 is clearly a pleading and comports with this definition of a judicial record. Accordingly, the petition comes within the statutory presumption of openness to the public contained in Code § 17.1-208. In relevant part, Code § 8.01-581.22 provides that: All memoranda, work products and other materials contained in the case files of a mediator or mediation program are confidential. . . . However, a written mediated agreement signed by the parties shall not be confidential, unless the parties otherwise agree in writing. Confidential materials and communications are not subject to disclosure in discovery or in any judicial or administrative proceeding except (i) where all parties to the mediation agree, in writing, to waive the confidentiality, . . . or (ix) as provided by law or rule. The settling parties initially stress the undisputed fact that the compromise settlements of the wrongful death claims in these cases resulted from mediation and that the parties to the mediation agreed that the terms of the settlements were to remain confidential. Consequently, the settling parties contend, notwithstanding the mandate of Code § 8.01-55 that the terms of the compromise settlements be included in the proper petitions to the circuit court for approval of the settlements, that Code § 8.01-581.22 operates so as to ensure the confidentiality of the terms of the mediated settlements. The settling parties' contention creates an unnecessary tension between the provisions of Code §§ 8.01-55 and 8.01-581.22 and is an unwarranted interpretation of the pertinent statutory scheme. The thrust of their contention is that the confidentiality provisions of Code § 8.01-581.22 require that the provisions of Code § 8.01-55 be applied so that the circuit court will be informed of the specific financial terms of the

- 204 - compromise settlement but those terms would not be included in the written petition so as to be subject to disclosure to the public under Code § 17.1-208. On brief in this appeal, the settling parties suggest that this could be accomplished by permitting the circuit court "to conduct all portions of the settlement approval petition in open court, but permit the [s]ettling [p]arties to present (but not file) a written document to the court that states the settlements' dollar amount and distribution." We disagree. In resolving this issue we acknowledge that within the pertinent statutory scheme there exists at least a facial tension between the "[e]xcept as otherwise provided by law" provision contained in Code § 17.1-208 and the "as provided by law or rule" provision contained in the confidentiality provisions of Code § 8.01-581.22(ix). The former suggests a limitation upon public access to judicial records whereas the latter suggests a limitation upon otherwise confidential mediated agreements. Because of the view we take in resolving this case, we need not further address that issue. The statutory scheme that provides for resolution of civil disputes through mediation found in Code § 8.01-581.21 et seq., including the confidentiality provisions of Code § 8.01-581.22 at issue here, is one of general application to all mediated settlements, not just to settlements of wrongful death claims. By contrast, Code § 8.01- 55 is a statute of precise and specific application, dealing only with the requirement for court approval of compromise settlements of wrongful death claims. Cf. Peerless Ins. Co. v. County of Fairfax, 274 Va. 236, 244, 645 S.E.2d 478, 483 (2007) (holding that when one statute addresses a subject in a general manner and another statute addresses part of the same subject in a more specific manner, the differing statutes should be harmonized if possible, but when they conflict the more specific statute prevails); see also, Alliance to Save the Mattaponi, 270 Va. at 439-40, 621 S.E.2d at 87; Capelle v. Orange County, 269 Va. 60, 65, 607 S.E.2d 103, 105 (2005). Undoubtedly, and consistent with the provisions of Code § 8.01-581.22, it may be common for settlements of various types of civil claims to be achieved through mediation and, yet, for the terms of such settlements not to be publicly disclosed because the parties agree not to do so. In this case, however, we must consider the harmonious application of Code § 8.01-55 and Code § 8.01-581.22 in light of the fact that the settling parties were required to obtain court approval of the mediated settlements of these wrongful death claims and to disclose the terms of those settlements in the petitions to the court seeking such approval. Although Shenandoah Publishing did not involve a mediated settlement of a wrongful death claim, we nonetheless find the rationale underlying the decision in that case to be instructive. In Shenandoah Publishing, we stated that the legislative purpose underpinning Code § 8.01-55 served the public's "societal interest in learning whether compromise settlements are equitable and whether the courts are administering properly the powers conferred upon them." 235 Va. at 260, 368 S.E.2d at 256. This is so because "the people have a vital interest, one of personal and familial as well as community concern, in cases involving claims of medical malpractice on the part of licensed practitioners and other health care providers." Id. Given the salutary purpose of Code § 8.01-55, we cannot conceive that the General Assembly intended to permit the confidentiality provisions allowed but not required by Code § 8.01-581.22 to trump the provisions of Code § 8.01-55 and, consequently, the right of public access provided for by Code § 17.1-208 in the context of the records of

- 205 - court approval of the compromise settlement of a wrongful death claim achieved through mediation. Accordingly, we hold that the circuit court did not err in ruling that in approving the compromise settlements in the present cases, the court was not subject to a de jure requirement under Code § 8.01-581.22 to place the record, or at least that portion of it detailing the financial terms of the compromise settlements, under seal. Finally, we consider the settling parties' assertion that the circuit court erred in finding that the circumstances of these particular cases did not warrant their being permitted to redact from the record all references to the financial terms of the compromise settlements. When the sealing of a record or part thereof is not a duty imposed by law, the decision whether to seal the record rests within the sound discretion of the circuit court. See In re Worrell Enters., Inc., 14 Va. App. 671, 675, 419 S.E.2d 271, 274, 8 Va. Law Rep. 3489 (1992). In Shenandoah Publishing, we said that in order to overcome the strong presumption in favor of public access to judicial records "the moving party must bear the burden of establishing an interest so compelling that it cannot be protected reasonably by some measure other than a protective order." 235 Va. at 259, 368 S.E.2d at 256. On brief, the settling parties assert that under Shenandoah Publishing, "when a court considers a motion to seal records, or exclude the public from civil judicial proceedings, 'it may not base its decision on conclusory assertions alone, but must make specific factual findings.'" Thus, they contend that the circuit court was required to make express findings of fact supporting its decision not to permit redaction of the records. We disagree. The settling parties' assertion wholly mischaracterizes the holding in Shenandoah Publishing. The quotation that the settling parties have drawn from the opinion appears only as a parenthetical to a citation in the opinion of the Court. 235 Va. at 259, 368 S.E.2d at 256 (citing and quoting In re Washington Post Co., 807 F.2d 383, 392 (4th Cir. 1986)). Moreover, in context it is clear that the citation and its explanatory parenthetical were supporting a proposition directly contradictory of the position being asserted by the settling parties in this case. When correctly interpreted, Shenandoah Publishing requires that a court may not base its decision to limit public access to court proceedings or records upon the conclusory assertions of the party requesting the closure. Id. Thus, the court must make specific factual findings only to support a decision to restrict public access to court records or proceedings. Because the presumption is in favor of openness, a court need not make findings of fact to justify a decision denying a request for closure of a proceeding or record absent any applicable statute or Rule of Court requiring such finding. Similarly, the settling parties' reliance on Richmond Newspapers, Inc. v. Commonwealth, 222 Va. 574, 590, 281 S.E.2d 915, 924 (1981), to assert that the newspapers as "intervenors . . . have the burden of showing that reasonable alternatives to closure are available" is misplaced. That burden exists only after the party seeking to restrict public access to judicial proceedings or records has made an adequate showing that it is entitled to such relief. Accordingly, our focus in this appeal is limited to whether the circuit court abused its discretion in finding that the settling parties failed to meet their burden to establish a compelling reason sufficient to overcome the presumption of public access to the records of the compromise settlements in these cases.

- 206 - In Koch's affidavit submitted on behalf of CAPS, it is asserted that if the terms of the compromise settlements were made public, CAPS "could become the target of lawsuits by individuals and/or businesses who might file lawsuits for the sole purpose of extracting a 'nuisance value' settlement." Koch further asserted that CAPS would not have entered into the settlement agreements had it known that the terms would not remain confidential and that an order requiring disclosure of the financial terms of the settlement would "deprive the CAPS defendants of one of the benefits it bargained for and obtained in exchange for the consideration paid." CAPS's concern that disclosure of the financial terms of the compromise settlements might subject it to further litigation may be well founded. However, that concern reflects no more than an unsupported conclusory assertion and pales in view of the statutory presumption of public access to judicial records contained in Code § 17.1- 208. CAPS's assertion that the circuit court's order denying the request to redact the settlement agreements would deny it the benefit of its bargain is based on the legally flawed presumption that private parties can agree to deprive the public of the right of access to judicial records guaranteed by Code § 17.1-208. While CAPS may have anticipated that the court would permit the petitions to approve the compromise settlements of the wrongful death claims at issue here to be made without disclosure of the financial terms of these settlements, it did so at its own risk. Clearly it did not lose any benefit of its bargains through the court's decision denying its request to redact the financial terms of the settlement agreements. The personal representatives and the beneficiaries to the settlements are still bound by their agreements that they keep the terms thereof confidential, and they fulfilled that duty by joining with CAPS in seeking to have the records sealed. The court's decision to not permit redaction of the financial terms from the petitions does not constitute a breach of that duty. In their affidavits submitted to the circuit court, the personal representatives stated various concerns they had with respect to having the financial terms of the compromise settlements made public. They asserted that the settlements of their claims were "private matter[s] between [the beneficiaries] and the defendants;" that they did not desire to be subject to further publicity as this would cause them "to re-live the trauma" associated with their decedents' demise; and, that publicity concerning the financial terms of the settlements might result in unwanted solicitations. Holt further expressed concern that she might be targeted by criminals and that she and her family "will be subject to public ridicule, criticism, and embarrassment" for having accepted the compromise settlement. While we are not unmindful of the seriousness of the concerns expressed by the personal representatives with respect to the potential consequences of the financial terms of their settlements being made public, concerns of emotional damage or financial harm when stated "in the abstract, [do not] constitute sufficient reasons to seal judicial records." Shenandoah Publishing, 235 Va. at 259, 368 S.E.2d at 256. "[T]he desire of the litigants is not sufficient reason to override the presumption of openness." Id. Moreover, it is not within the province of this Court to alter the pertinent statutory scheme which otherwise might warrant amendment by the legislature so as to preserve the confidentiality of the mediated settlement terms involving wrongful death claims such as those at issue here. Accordingly, we hold that the circuit court did not err in denying the settling parties' request to have the financial terms of the compromise settlements redacted in the court records.

- 207 -

Notes on Wrongful Death

Multiple Representatives? A defendant who settles with a putative personal representative in a wrongful death case should obtain court approval of the settlement, or take other steps to assure that the case is being settled with the correct representative. See Caputo v. Holt, 217 Va. 302, 228 S.E.2d 134 (1976)(wrong person qualified as personal representative, and defendant settled with him for $20,000. Later the correct personal representative pursued the action and recovered $25,000; no offset was allowed for the earlier payment!). Distribution of Proceeds to Survivors. Damages recoverable in wrongful death actions are prescribed by Code § 8.01-52. They include pecuniary loss, care, treatment and hospitalization expenses, funeral expenses and heart balm. Punitive damages are available where the conduct of defendant was willful or wanton. Code §§ 8.01-53 and - 54 detail the recipients of a wrongful death award, in a simple case the spouse and children (or grandchildren through deceased children). Where no such survivors exist, these code sections provide fallback provisions. Statute of Limitations. The limitations period for wrongful death actions is two years. See generally Chapter 16, LIMITATION OF ACTIONS. Note, however, that because of the derivative status of wrongful death actions, if the limitation period on the underlying tort expired prior to death of the decedent, the wrongful death claim will be barred. See, e.g., Street v. Consumers Mining Corp., 185 Va. 561, 39 S.E.2d 271 (1946).

- 208 -

K. Suing Estates of Deceased Persons

SWANN v. MARKS 252 Va. 181, 476 S.E.2d 170 (1996)

JUSTICE LACY delivered the opinion of the Court. In this personal injury action, we consider whether a motion for judgment filed against the "estate" of a deceased person tolls the statute of limitations, and whether substitution of the personal representative for the "estate" is the correction of a misnomer under Code § 8.01-6. . . . On March 29, 1990, James M. Swann was injured when the automobile in which he was riding was involved in an accident with another vehicle driven by William L. Wild, a resident of Delaware. Wild died on January 18, 1991, from causes unrelated to the accident. Swann learned of Wild's death in July 1992, and on December 18, 1992, filed a motion for judgment against "Estate of William L. Wild." Almost two years later, on October 5, 1994, Steven L. Marks qualified as the personal representative of Wild's Estate. . . . Swann argues that his action is not barred by the statute of limitations because the filing of the [complaint] against the "Estate of William L. Wild" was timely and tolled the statute of limitations; that the substitution of Marks was the correction of a misnomer under Code § 8.01-6; that the nonsuit was properly granted; and that the nonsuit order was a final judgment precluding reconsideration of those issues in the refiled suit. Swann's arguments are grounded on the proposition that a motion for judgment against the "estate" of a deceased person is valid and tolls the statute of limitations. Because this premise is erroneous, we will affirm the judgment of the trial court. . . Marks contends that suit against an "estate" is a nullity and cannot toll the statute of limitations. We agree. To toll the statute of limitations, a suit must be filed against a proper party. Virginia statutes do not authorize an action against an "estate." Code §§ 8.01-229(B)(1) and (B)(2) direct the decedent's personal representative to file any personal action which the decedent may have been entitled to bring and to defend any personal action which could be brought against the decedent. This limitation is further highlighted by the language of the statute which allows claims to be filed against the property of the estate, but provides that actions may only be filed against the decedent's personal representative. Code §§ 8.01-229(B)(2) and (B)(4). This statutory scheme is consistent with the principle that "suits and actions must be prosecuted by and against living parties." Rennolds v. Williams, 147 Va. 196, 198, 136 S.E. 597, 597 (1927). A motion for judgment against an "estate" is a nullity and cannot toll the statute of limitations. Furthermore, the substitution of a personal representative for the "estate" is not the correction of a misnomer. Misnomer arises when the right person is incorrectly named, not where the wrong defendant is named. Rockwell v. Allman, 211 Va. 560, 561, 179 S.E.2d 471, 472 (1971). The personal representative of a decedent and the decedent's

- 209 - "estate" are two separate entities; the personal representative is a living individual while the "estate" is a collection of property. Thus, one cannot be substituted for another under the concept of correcting a misnomer. Swann also contends that the trial court erred because the nonsuit order was a final order, and therefore the order allowing substitution was not subject to modification in the refiled action. To challenge the substitution order, Swann contends that Marks was required to appeal the nonsuit order. A nonsuit order, however, is ordinarily not considered a final judgment for purposes of appeal. McManama v. Plunk, 250 Va. 72, 32, 458 S.E.2d 759, 761 (1995). A nonsuit order is a final, appealable order only when a dispute exists regarding the propriety of granting the nonsuit. Id. Here, there is no dispute as to the entry of the nonsuit order. The nonsuit order is not a final judgment as to the substitution order and did not clothe the substitution order with the force of res judicata. Thus, the trial court's consideration of Marks' special plea of the statute of limitations, including consideration of the substitution order, was proper. For the reasons expressed, we will affirm the judgment of the trial court.

- 210 - - 211 -

L. Minors, Persons Under a Disability, and Convicts.

Important Code Sections

§8.01-2 General Definitions. As used in this title, unless the context otherwise requires, the term: . . . . 6. "Person under a disability" shall include: a. a person convicted of a felony during the period he is confined; b. an infant; c. an incapacitated person as defined in § 37.2-1000; d. an incapacitated ex-service person under § 37.2-1016; or e. any other person who, upon motion to the court by any party to an action or suit or by any person in interest, is determined to be (i) incapable of taking proper care of his person, or (ii) incapable of properly handling and managing his estate, or (iii) otherwise unable to defend his property or legal rights either because of age or temporary or permanent impairment, whether physical, mental, or both. Such impairment may also include substance abuse as defined in § 37.2-100;

§8.01-8 How Minors May Sue. Any minor entitled to sue may do so by his next friend. Either or both parents may sue on behalf of a minor as his next friend.

§8.01-9. Guardian ad litem for persons under disability; when guardian ad litem need not be appointed for person under disability A. A suit wherein a person under a disability is a party defendant shall not be stayed because of such disability, but the court in which the suit is pending, or the clerk thereof, shall appoint a discreet and competent attorney- at-law as guardian ad litem to such defendant, whether the defendant has been served with process or not. If no such attorney is found willing to act, the court shall appoint some other discreet and proper person as guardian ad litem. Any guardian ad litem so appointed shall not be liable for costs. Every guardian ad litem shall faithfully represent the estate or other interest of the person under a disability for whom he is appointed, and it shall be the duty of the court to see that the interest of the defendant is so represented and protected. Whenever the court is of the opinion that the interest of the defendant so requires, it shall remove any guardian ad litem and appoint another in his stead. When, in any case, the court is satisfied that the guardian ad litem has rendered substantial service in representing the interest of the person under a disability, it may allow the guardian reasonable compensation therefor, and his actual expenses, if any, to be paid out of the estate of the defendant. However, if the defendant's estate is inadequate for the purpose of paying compensation and expenses, all, or any part thereof, may be taxed as costs in the proceeding or, in the case of proceedings to adjudicate a person under a disability as an habitual offender pursuant to former § 46.2-351.2 or former § 46.2-352, shall be paid by the

- 212 - Commonwealth out of the state treasury from the appropriation for criminal charges. In a civil action against an incarcerated felon for damages arising out of a criminal act, the compensation and expenses of the guardian ad litem shall be paid by the Commonwealth out of the state treasury from the appropriation for criminal charges. If judgment is against the incarcerated felon, the amount allowed by the court to the guardian ad litem shall be taxed against the incarcerated felon as part of the costs of the proceeding, and if collected, the same shall be paid to the Commonwealth. By order of the court, in a civil action for divorce from an incarcerated felon, the compensation and expenses of the guardian ad litem shall be paid by the Commonwealth out of the state treasury from the appropriation for criminal charges if the crime (i) for which the felon is incarcerated occurred after the date of the marriage for which the divorce is sought, (ii) for which the felon is incarcerated was committed against the felon's spouse, child, or stepchild and involved physical injury, sexual assault, or sexual abuse, and (iii) resulted in incarceration subsequent to conviction and the felon was sentenced to confinement for more than one year. The amount allowed by the court to the guardian ad litem shall be taxed against the incarcerated felon as part of the costs of the proceeding, and if collected, the same shall be paid to the Commonwealth. B. Notwithstanding the provisions of subsection A or the provisions of any other law to the contrary, in any suit wherein a person under a disability is a party and is represented by an attorney-at-law duly licensed to practice in this Commonwealth, who shall have entered of record an appearance for such person, no guardian ad litem need be appointed for such person unless the court determines that the interests of justice require such appointment; or unless a statute applicable to such suit expressly requires that the person under a disability be represented by a guardian ad litem. The court may, in its discretion, appoint the attorney of record for the person under a disability as his guardian ad litem, in which event the attorney shall perform all the duties and functions of guardian ad litem. Any judgment or decree rendered by any court against a person under a disability without a guardian ad litem, but in compliance with the provisions of this subsection B, shall be as valid as if the guardian ad litem had been appointed.

- 213 - Powers and Responsibilities of Guardians

COOK v. RADFORD COMMUNITY HOSPITAL 260 Va. 443, 536 S.E.2d 906 (2000)

JUSTICE LACY delivered the opinion of the Court: In this appeal, we consider whether Code § 37.1-141 precludes the filing of an action by a person adjudged incapacitated and requires such action to be brought by the guardian of the incapacitated person. On December 20, 1995, Alta R. Cook (Cook) was declared incapacitated pursuant to former Code § 37.1-132. Cook's husband, Donnie R. Cook, was appointed as her guardian. [Luckily, she made a complete recovery a year and one-half later. Ed.]On November 24, 1997, Cook, in her own name, filed a medical malpractice action against Radford Community Hospital, Incorporated, and Drs. Mark Todd and Robert C. Solomon for injuries she alleged resulted from treatment she received while a patient at the Hospital from November 24, 1995 to January 17, 1996. She filed an amended motion for judgment in November 1998. The defendants filed a joint motion to dismiss arguing that, because a guardian had been appointed for Cook, Code § 37.1-141 required that her guardian prosecute the action. Agreeing that Cook did not have standing to sue in her own right, the trial court determined that Cook was not entitled to amend her pleadings under either the misnomer statute, Code § 8.01-6, or the misjoinder statute, Code § 8.01-5, and dismissed Cook's motion for judgment. Cook appeals from that judgment. Cook acknowledges that pursuant to Code § 37.1-141, a fiduciary "should prosecute actions for his ward." Nevertheless, she maintains that the failure to comply with the statute does not preclude pleading amendments to cure any defects. Code § 37.1-141 provides: All actions or suits to which the ward is a party at the time of qualification of the fiduciary and all such actions or suits subsequently instituted shall, subject to any conditions or limitations set forth in the order appointing him, be prosecuted or defended, as the case may be, by the fiduciary, after ten days' notice of the pendency thereof, which notice shall be given by the clerk of the court in which the same are pending. The use of the word "shall" indicates that prosecution of a ward's cause of action by the fiduciary, if one has been appointed, is mandatory. Failure to comply with a mandatory condition can preclude curative amendments. . . . Cook advances a number of arguments in support of her position that a suit which does not comply with the provisions of Code § 37.1-141 is nevertheless valid. [Scholarly discussion, going carefully over the long history of guardianship in Virginia law, then answering “Sorry,” is omitted. Ed.] Code § 8.01-9 is inapposite to the issue in this case. That section is a general law applying to all persons under a disability, which includes minors, alcoholics, drug addicts, incarcerated felons, as well as incapacitated persons. The statute is not

- 214 - concerned with the capacity of a person under a disability to sue but with the protection of such person when named as a defendant in a lawsuit. One who institutes litigation is in a posture completely different than one against whom suit is filed. The filing of a lawsuit is an affirmative act on the part of a plaintiff and does not carry with it the need for the type of court-initiated protection which may exist when a person with a disability is required to defend himself in litigation that he did not instigate, particularly if such person does not have a fiduciary. The provisions of Code § 8.01-9 do not provide any basis for concluding that a suit by a person under a disability who has a duly appointed fiduciary is valid. . . . For the reasons stated above, we conclude that if a fiduciary has been appointed for a ward, Code § 37.1-141 requires that the fiduciary prosecute any suit to which the ward is a party. In the absence of an exception, the ward does not have standing to sue in his or her own name. Based on this construction of Code § 37.1-141, the trial court correctly refused to allow amendment of the pleadings to add or substitute Cook's guardian as the plaintiff. Neither Rule 1:8, relating to liberal leave to amend pleadings, nor Code § 8.01-5, relating to misjoinder and nonjoinder of parties, are applicable here. With regard to Rule 1:8, we stated in The Chesapeake House on the Bay, Inc. v. Virginia Nat'l Bank, 231 Va. 440, 442-43, 344 S.E.2d 913, 915 (1986): The foregoing rule [Rule 1:8] has always been subject to the limitation that a new plaintiff may not be substituted for an original plaintiff who lacked standing to bring the suit. Statutes relating to misjoinder and nonjoinder are not applicable in such situations, and the sole remedy is a nonsuit followed by a new action brought in the name of a proper plaintiff. As in Chesapeake House, the guardian here cannot be substituted for Cook because Cook did not have standing to bring the suit. Likewise Code § 8.01-6 is not applicable here. That statute permits amendment and relation back if the pleadings contain a misnomer. A misnomer "arises when the right person is incorrectly named, not where the wrong [person] is named." Swann v. Marks, 252 Va. 181, 184, 476 S.E.2d 170, 172 (1996). In this case the "right person" was Cook's guardian. The "right person" was not incorrectly named; the "wrong person," Cook, was named. For the reasons stated, we will affirm the judgment of the trial court.

- 215 - STANLEY v. FAIRFAX DEPT. OF SOCIAL SERVICES 242 Va. 60, 405 S.E.2d 621 (1991)

JUSTICE WHITING delivered the opinion of the Court: . . . . On November 15, 1988, the J&DR Court terminated both parents' residual rights with respect to the three children as provided in Code § 16.1-283(A). Donna, but not Melvin, appealed to the circuit court. On February 24, 1989, the circuit court terminated Donna's parental rights. Donna appealed to the Court of Appeals which, on July 17, 1990, affirmed the circuit court's ruling as to two of the children but reversed its ruling as to the child who was in the maternal grandmother's physical custody. Stanley v. Fairfax County Dep't of Social Services, 10 Va. App. 596, 605, 395 S.E.2d 199, 204 (1990). Deeming the question of the guardian ad litem's standing to petition for termination of parental rights to be one of significant precedential value, we awarded Donna an appeal limited to that issue. Donna argues that a guardian ad litem can take no affirmative action to deprive his ward of any substantive right the ward already enjoys. Donna claims that a guardian ad litem has only an "advisory role." However, we have not regarded that role as merely advisory; instead, we have recognized that a guardian ad litem can appeal an adverse ruling, see Givens v. Clem, 107 Va. 435, 437, 59 S.E. 413, 414 (1907), and can consent to a transfer to another jurisdiction of a case involving an infant's rights. Lemmon v. Herbert, 92 Va. 653, 659, 24 S.E. 249, 251 (1896). Accordingly, we conclude that a guardian ad litem may file affirmative pleadings necessary to protect the ward's interest. Finally, although Code § 16.1-283 is silent as to who may initiate termination proceedings, Donna notes that this section prohibits the filing of a termination petition prior to the filing of a foster care plan documenting termination as being in the best interest of the children. And Donna points out that Code § 16.1-281 expressly requires that the department prepare and file such foster care plans in the Stanley cases. Asserting that these code sections must be strictly construed, Donna concludes that because the filing of a foster care plan by the department is a necessary predicate to a termination proceeding, the legislature must have intended that the department would be the only entity that could file a termination petition in these cases. We do not agree. We will not give this procedural aspect of Code § 16.1-283 a strict construction. It is intended to provide for the protection of abused and neglected children. In describing the purpose and intent of the "Juvenile and Domestic Relations District Court Law," Code §§ 16.1-226 to -334, Code § 16.1-227 provides that such law "shall be construed liberally and as remedial in character. . . . It is the intention of this law that in all proceedings the welfare of the child and the family is the paramount concern of the Commonwealth . . . ." And the best interest of the child must be the primary concern of the court. Bailes v. Sours, 231 Va. 96, 99, 340 S.E.2d 824, 826 (1986). Even though Code § 16.1-283 says nothing about who may file a petition for termination of parental rights, Code § 16.1-241(A) (1990 Supp.) provides that "[t]he authority of the juvenile court to adjudicate matters involving the . . . disposition of a child shall not be limited to the consideration of petitions filed by a mother, father, or

- 216 - legal guardian but shall include petitions filed at any time by any party with a legitimate interest therein." A guardian ad litem certainly has a legitimate interest in whether his ward is to be subjected to continued abuse and neglect. Further, Code § 16.1-266(A) requires the J&DR Court to "appoint a discreet and competent attorney-at-law as guardian ad litem to represent the child" in abuse and neglect proceedings as well as in proceedings involving the termination of residual parental rights. And, Code § 8.01-9 requires that "[e]very guardian ad litem shall faithfully represent the . . . interest of the person under a disability for whom he is appointed." Therefore, if a guardian ad litem feels that the best interests of his ward compel termination of the parents' residual rights, he can and should file an appropriate termination petition. For all these reasons, we conclude that a guardian ad litem has standing to file a petition for termination of residual parental rights. Accordingly, we will affirm the judgment of the Court of Appeals.

- 217 -

Note on Indigency

Indigency and Guardians. Under Code § 8.01-9 (set out earlier in this Chapter) the General Assembly provided that if the defendant is indigent, the Commonwealth must pay for the guardian ad litem appointed for an incarcerated felon who is sued by a crime victim. The compensation and expenses of the guardian ad litem will be paid by the Commonwealth out of the state treasury from the appropriation for criminal charges. If judgment is against the incarcerated felon, the amount allowed by the court to the guardian ad litem shall be taxed against the incarcerated felon as part of the costs of the proceeding, and if collected, this amount will be repaid to the Commonwealth.

- 218 -

Prisoners

§ 53.1-221. Appointment of Committee; Bond. A. When a person is convicted of a felony and sentenced to confinement in a state correctional facility, his estate, both real and personal, may, on motion of any party interested, be committed by the circuit court of the county or city in which his estate, or some part thereof is, to a person selected by the court. B. If a person so convicted and sentenced, whether a resident or a nonresident of Virginia, has no property or estate in the Commonwealth, a committee may be appointed for him, on motion of any party interested, by the circuit court of the county or city wherein the offense for which he was convicted was committed. C. A committee appointed pursuant to this section shall give such bond, either secured or unsecured, as is required by the court and shall be subject to all applicable provisions of Title 26. D. A person for whom a committee is appointed pursuant to this section is not thereby deprived of the capacity to make a will and, unless and until a committee is appointed, such person shall continue to have the same capacity, rights, powers, and authority over his estate, affairs, and property that he had prior to such conviction and sentencing.

§ 53.1-222. Powers and Liabilities of Committee; Prosecution and Defense of Suits to which Prisoner is Party. A committee appointed pursuant to § 53.1-221 may sue and be sued in respect to all claims or demands of every nature in favor of or against such prisoner and against any of the prisoner's estate. All actions or suits to which the prisoner is a party at the time of his conviction shall be prosecuted or defended, as the case may be, by such committee after ten days' notice of the pendency thereof, which notice shall be given by the clerk of the court in which the same are pending.

§ 53.1-223. Restriction on suits against prisoners. No action or suit on any claim or demand, except suits for divorce, actions to establish a parent and child relationship between a child and a prisoner and actions to establish a prisoner's child support obligation, shall be maintained against a prisoner after judgment of conviction and while he is incarcerated, except through his committee, unless a guardian ad litem is appointed for the prisoner pursuant to § 8.01-9, or an attorney licensed to practice law in the Commonwealth has entered of record an appearance for such prisoner. However, in any suit for divorce instituted against a prisoner, the court shall appoint a committee prior to any determination as to the property of the parties under § 20-107.3.

- 219 - CROSS v. SUNDIN 222 Va. 37, 278 S.E.2d 805 (1981) Per Curiam. The sole issue in this appeal is whether the trial court erred in dismissing an action filed by the appellant, a convict, on the ground that he could not proceed with the action without the appointment of a committee pursuant to Code § 53-307. Subsequent to his conviction and incarceration for second-degree murder, Walter D. Cross brought an action in 1979 against Sandra Rhea Sundin and Martha Peppler, individually and in their capacity as executrices of the Estate of Marcia Lane Cross. Alleging that Code § 53-307 deprived Cross of standing to maintain the action, the appellees filed a motion to dismiss, which the circuit court sustained in an order filed on December 18, 1979. Cross, contending he had a constitutional right to petition the courts without the appointment of a committee, then brought this appeal. Because we believe this case is governed by Dunn v. Terry, Administratrix, 216 Va. 234, 217 S.E.2d 849 (1975), we find it unnecessary to reach the appellant's constitutional challenge. In Dunn, Charles R. Dunn, III, a prisoner, was sued by an administratrix prior to his incarceration. Although Dunn was represented by counsel in the civil proceedings, the trial occurred during his incarceration, and no committee was appointed for him. After the trial court rendered judgment against him, Dunn claimed that the failure to appoint a committee invalidated the civil judgment rendered against him. Rejecting his argument, we ruled that the appointment of a committee was a procedural provision which could be waived by a prisoner. In support of our holding, we noted that "[c]onvicts are not civilly dead in Virginia" and that Dunn "was not legally incompetent to transact business either before or after his conviction in the criminal case." Id . at 239, 217 S.E.2d at 854. Because Dunn elected to utilize the services of his attorneys and did not move for the appointment of a committee, we concluded that Dunn had waived the procedural provisions of Code § 53-307. Id. Cross was free to waive the appointment of a committee, if he so desired. Consequently, the trial court erred in dismissing Cross's action on the basis of Code § 53-307. For the reasons stated, the judgment of the trial court will be reversed and the case remanded for proceedings not inconsistent with this opinion.

- 220 - Hypotheticals 1. After C was convicted of committing a crime against V, and duly incarcerated, V brought a civil suit against C for damages. C was personally served with process in the prison by the sheriff, and thereafter C defaulted. V sought to enforce the judgment but C moves to set aside the judgment. What result?

2. After C was charged with committing a crime against V, V sued him for damages. A legal aid attorney appeared for C in defense of the civil charge. Shortly after the civil suit was commenced, C was convicted of the crime and duly incarcerated. May V continue to prepare for trial of the civil suit? How should the matter proceed?

M. "Next Friends"

MOSES v. AKERS 203 Va. 130, 122 S.E.2d 864 (1961)

JUSTICE I'ANSON delivered the opinion of the court. This action was instituted by the plaintiff, Eva Jane Moses, an infant, who sues by her mother and next friend, Hallie McMahon, against the defendant, Betty Jean Akers, an infant, to recover damages for injuries suffered by her while riding as a guest passenger in an automobile involved in a non-collision accident as a result of the defendant's alleged gross negligence in the operation of the car. The plaintiff was married several months after the injuries were sustained and the style of the case was changed before trial to carry her married name. A trial by jury resulted in a verdict in favor of the plaintiff for $2,000, upon which judgment was entered after the trial court overruled plaintiff's motion to set aside the verdict of the jury on the ground of inadequacy and to grant a new trial on the question of damages only. . . . At the outset we are confronted with the validity of the judgment obtained. It appears from the record that at the time of the trial the defendant was an infant, and it does not affirmatively appear that a guardian ad litem was appointed in the court below to represent her interest. Indeed, it was conceded at the bar of this Court that a guardian ad litem was not appointed and no request was made for such appointment. . . . It is the settled law of this Commonwealth that a personal judgment rendered against an infant for whom it does not affirmatively appear of record that a guardian ad litem has been appointed is void. . . . Hence the judgment obtained in this case will have to be set aside and the action remanded for a new trial. . . .

- 221 - "Next Friend" Pleading Format – Beware the Trap

IN THE CIRCUIT COURT ======DEBBIE THOMPSON HERNDON, AS MOTHER AND NEXT FRIEND OF MATTHEWS MCNEIL HERNDON. v. ST. MARY'S HOSPITAL. In 2003 the Supreme Court held in a medical malpractice action involving a minor that the trial court correctly dismissed without prejudice a suit brought under the style "Debbie Thompson Herndon, as mother and next friend of Matthew McNeil Herndon" because the common law requires that an action on behalf of a minor child be brought in the child's name, not in the name of his next friend, and the 1998 amendment to Code § 8.01-8 did not express an intention to change that rule. The pleading named as plaintiffs "Debbie Thompson Herndon, as mother and next friend of Matthew McNeil Herndon" and "Larry McNeil Herndon, as father and next friend of Matthew McNeil Herndon." The defendant hospital filed a motion to dismiss on the ground that the action was not brought by the minor child his own name by his "next friend" in conformance with Code § 8.01-8. The circuit court granted the hospital's motion and dismissed the action without prejudice. Code § 8.01-8 provides, in its entirety, that "[a]ny minor entitled to sue may do so by his next friend. Either or both parents may sue on behalf of a minor as his next friend." Before 1998, Code § 8.01-8 consisted solely of the first sentence set forth above. In 1998, the General Assembly amended the statute by adding the second sentence. The Court in the Herndon case noted that the language of Code § 8.01-8 is ambiguous because the first sentence directs that a minor child bring an action by his next friend, while the second sentence provides that either or both parents may sue on behalf of the minor child as next friend. It was undisputed that before the 1998 amendment to Code § 8.01-8, the common law required that an action on behalf of a minor child be brought in the child's name, not in the name of his next friend. The minor and not the next friend must be the real party plaintiff. The Court recited that the reason underlying this established rule is that the minor child, not the next friend, is the real party in interest in such an action. If the action is brought in the name of the next friend "on behalf of the infant" it cannot be maintained. No party, infant or adult, may sue by deputy. Any statutory change in the common law must be reflected in the express words of the statute. Here the Court held that the second sentence, when considered together with the first sentence, does not plainly manifest an intent to authorize parents to bring a child's action in the parents' own name, but merely specifies that either or both parents may act as next friend on behalf of their minor child. Thus, the 1998 amendment to Code § 8.01-8 was found merely to reflect the General Assembly's intent to clarify the fact that either or both parents may initiate a single action as their child's next friend.

- 222 - N. Joinder – Adding, Dropping & Substituting Parties

Overview The opportunity bring interested parties and prospective defendants before the court of equity has long been recognized, and is now supported by § 8.01-7. A sister section, Code §8.01-5 also emphasizes that defects in the parties are not fatal: persons or entities will simply be added or dropped as needed to make the case work. Third-party practice is principally controlled by Rule 3:13, though the joinder provisions of Rule 3:12 in some circumstances will also militate for inclusion of parties who should be party to the suit. New parties may also be added on plaintiff's motion, under Rule 3:16. Joinder. Joinder under Rule 3:12 permits addition of persons subject to service of process if their absence would preclude the granting of complete relief among the initial parties, or if the outcome of the case would in the course of things affect the joined party's interests. See Rule 3:12 and the general discussion in Chapter 4. Further grounds exist if failure to join the new party would leave the present parties exposed to the risk of multiple, inconsistent adjudications. Note that under subsection (d) of Rule 3:12, a plaintiff asserting a claim for relief must identify persons with these relationships to the claim at suit, and explain why they are not joined initially. A motion to join an additional party under this rule must be filed with the clerk within 21 days after service of the complaint upon the movant. Indeed, it may be that a non-party who recognizes the need to participate in the suit may use this rule to seek joinder. When the present parties seek to add a new party using Rule 3:12 the motion must be served in the fashion of a complaint (without tax or fees) If the prospective party cannot be joined for any reason the court will evaluate the means for continuing the suit in a fashion which protects the parties at the bar and the absent person. The suit may be dismissed if the court concludes in equity and good conscience that it cannot proceed even with provisions to lessen the prejudice from the absence of needed persons, such as protective provisions, shaping of the relief. Additional Parties on Plaintiff's Motion. Rule 3:16's provisions permit plaintiff to move for leave of court to add further party defendants, at any stage of the proceedings as justice may require. Cf. Code §§ 8.01-5 and 8.01-7. An amended complaint is served on counsel for the existing parties (Rule 1:12) and if the motion to add parties is granted the amended complaint is filed with the clerk's office. All newly added defendants must respond pursuant to the rules, answering timely after service.

Rule 3:16. New Parties. A new party may be added, on motion of the plaintiff by order of the court at any stage of the case as the ends of justice may require. The motion, accompanied by an amended complaint, shall be served on the existing parties as required by Rule 1:12. If the motion is granted, the amended complaint shall be filed in the clerk's office and all the provisions of Rule 3:4 shall apply as to the new parties, but no writ tax, clerk's fee or deposit for costs is required. All defendants shall file pleadings in response thereto as required by these Rules.

- 223 - Addition or Dropping of Parties by the Court. The court is involved in the misjoinder and non-joinder issues discussed above. In addition, under § 8.01-5, the court may, upon affidavit, take action as the ends of justice require. Under § 8.01-7, the court may act sua sponte in cases where justice cannot be achieved without presence of new parties. Necessary Parties. Note that in some instances the absence of a necessary party will undermine the ability of the trial court to enter a valid judgment. The policy of assuring that a resolution will be reached that avoids a multiplicity of litigation leads to this result.

Effect of Death of a Party

Several key Code sections set forth a liberal policy for continuance of actions in which a death occurs:

§8.01-19 Effect of Marriage or Change of Name of Party. The marriage of a party shall not cause a suit or action to abate. If a party changes his name, upon affidavit or other proof of the fact, the suit or action shall proceed in the new name, but if the change of name be not suggested before judgment, the judgment shall be as valid, and may be enforced in like manner, as if no such change of name had taken place.

§8.01-21 Judgment when Death or Disability Occurs After Verdict but Before Judgment. When a party dies, or becomes convicted of a felony or insane, or the powers of a party who is a personal representative or committee cease, if such fact occurs after verdict, judgment may be entered as if it had not occurred.

§8.01-22 When Death or Disability Occurs as to Any of Several Plaintiffs or Defendants. If a party plaintiff or defendant becomes incapable of prosecuting or defending because of death, insanity, conviction of felony, removal from office, or other reason and there are one or more co-plaintiffs or co-defendants, the court on motion may in its discretion either (i) suspend the case until a successor in interest is appointed in accordance with the Rules of Court, or (ii) sever the action or suit so that the case shall proceed against the remaining parties without delay, with the case as to the former party being continued and tried separately against the successor in interest when he is substituted as provided by the Rules of Court.

- 224 - REVISERS' NOTE Since Rules . . . provide an adequate procedure for substitution of a party if he dies, etc., former [Code provisions have been] altered to give the court discretion to halt the entire proceedings pending the appointment of a successor or to permit the action to proceed against the living parties severing the decedent and preserving a separate action as to him.

§8.01-25 Survival of causes of action. Every cause of action whether legal or equitable, which is cognizable in the Commonwealth of Virginia, shall survive either the death of the person against whom the cause of action is or may be asserted, or the death of the person in whose favor the cause of action existed, or the death of both such persons. Provided that in such an action punitive damages shall not be awarded after the death of the party liable for the injury. Provided, further, that if the cause of action asserted by the decedent in his lifetime was for a personal injury and such decedent dies as a result of the injury complained of with a timely action for damages arising from such injury pending, the action shall be amended in accordance with the provisions of § 8.01-56. As used in this section, the term "death" shall include the death of an individual or the termination or

Death and the Statute of Limitations

In a recent case the Supreme Court had occasion to lay out in some detail the application of the tolling provisions where a person is alive when sued and dies while the action is pending. See generally Parker v. Warren, 273 Va. 20, 639 S.E.2d 179 (2007), construing Code § 8.01-229(B)(2) (a) and (b). Applying the "plain meaning" of these sections, the Court found that they do not address identical circumstances and therefore do not create different limitations periods for identical circumstances. Subparagraph (a) provides an expanded limitation period for filing suit against the personal representative of a defendant who has died before the litigation was filed. This subparagraph does not address what effect, if any, a plaintiff's pleading naming a deceased defendant would have on the running of the statute of limitations. Subparagraph (b), added in 1991, addresses this situation. Prior to the enactment of Code § 8.01-229(B)(2)(b) in 1991, Virginia law provided that a suit filed against a deceased party was a nullity and, as such, could not operate to toll the statute of limitations. Furthermore, because the personal representative was a person distinct from the decedent, the mistaken naming of the decedent was not a misnomer and substitution of the personal representative did not relate back to the initial filing of the lawsuit. Subparagraph (b) addresses this circumstance by providing that a suit filed against a defendant who was deceased when the action was filed could be amended to substitute the decedent's personal representative and would be considered timely filed if the substitution occurred within two years of the original filing date. The Court concluded that, as written, Code § 8.01-229(B)(2)(b) applies in circumstances in which a decedent dies before a personal action against him is commenced. In a case where the defendant dies after plaintiff filed the motion for judgment, subparagraph (b) of Code § 8.01- 229(B)(2) does not apply.

- 225 -

Substitution Procedure

Under Rule 3:17, which follows the recent revisions in both the law and equity-side rules previously in force, if a party becomes incapable of prosecuting or defending because of death, insanity, conviction of felony, removal from office, or other cause, his successor in interest may be substituted as a party in his place. The procedure calls for a motion—either by the successor or of any party to the suit. If the successor does not make or consent to the motion, the rule provides that the party making the motion shall file the motion and a proposed amended pleading effecting the substitution in the clerk's office and serve a copy of the motion and the proposed amended pleading upon the party to be substituted in the manner prescribed by the Code of Virginia for serving original process upon such party. Unless the movant and the party to be substituted agree otherwise, or the court orders a different schedule, the party sought to be substituted is required to file a written response to the motion for substitution within twenty-one days after service of the motion and proposed amended pleading upon the party sought to be substituted.

Rule 3:17. Substitution of Parties. (a) Substitution of a successor.—If a person becomes incapable of prosecuting or defending because of death, disability, conviction of felony, removal from office, or other cause, a successor in interest may be substituted as a party in such person's place. (b) Motion, Consent, Procedure.—Substitution shall be made on motion of the successor or of any party to the suit. If the successor does not make or consent to the motion, the party making the motion shall file the motion and a proposed amended pleading effecting the substitution in the clerk's office and serve a copy of the motion and the proposed amended pleading upon the party to be substituted in the manner prescribed by the Code of Virginia for serving original process upon such party. Unless the movant and the party to be substituted agree otherwise, or the court orders a different schedule, the party sought to be substituted shall file a written response to the motion for substitution within 21 days after service of the motion and proposed amended pleading upon the party sought to be substituted.

Comments on This Rule. Under this provision of the amended Rules of Court, if the successor does not make or consent to the motion, the party making the motion will need to file the motion and a proposed amended pleading effecting the substitution in the clerk's office and serve a copy of the motion and the proposed amended pleading upon the party to be substituted in the manner prescribed by the Code of Virginia for serving original process upon such party. Unless the movant and the party to be substituted agree otherwise, or the court orders a different schedule, the party sought to be substituted is required to file a written response to the motion for substitution within twenty-one days after service of the motion and proposed amended pleading upon the party sought to be substituted.

- 226 - Note, however, that while—under Rule 1:8 and such cases as Jacobson v. Southern Biscuit Co.—leave to amend should be liberally granted in furtherance of the ends of justice, and that even an amendment substituting a new plaintiff or defendant for an original party may be granted if the substituted party bears a real relation of interest to the original party and no new cause of action is introduced, this liberality ``has always been subject to the limitation that a new plaintiff may not be substituted for an original plaintiff who lacked standing to bring the suit,'' since that suit is ``void.'' Statutes relating to misjoinder and nonjoinder are not applicable in such situations, and the sole remedy is a nonsuit followed by a new action brought in the name of a proper plaintiff. There can be disastrous statute of limitations consequences if the action is filed shortly before the expiration of the period and a plaintiff with standing or other right to proceed is the named party.

- 227 - Void Suits and Nullities

The principal limitation on substitution of parties is the doctrine in Virginia that the initial action may have been a nullity if the person who originally filed it lacked standing or was under some other bar from suit.

CHESAPEAKE HOUSE ON THE BAY v. VIRGINIA NAT'L BANK 231 Va. 440, 344 S.E.2d 913 (1986)

JUSTICE RUSSELL delivered the opinion of the Court. The sole question presented by this appeal is whether the trial court correctly refused to permit a substitution of parties plaintiff where the original plaintiff had no standing to maintain the action. [A condominium association sued when construction defects were found in the building. At the time, however, the statutes did not afford the association standing. It later sought to amend to add some unit owners as co-plaintiffs]. Because the statutory scheme before 1981 failed to vest power in a unit owners' association to maintain actions of this kind, the trial court correctly ruled that Chesapeake had no standing to institute this action. The cause of action was barred by the statute of limitations before the effective date of the 1981 amendment. Chesapeake, citing Rule 1:8 and Jacobson v. Southern Biscuit Co., 198 Va. 813, 816, 97 S.E.2d 1, 3 (1957), argues that leave to amend should be liberally granted in furtherance of the ends of justice, and that even an amendment substituting a new plaintiff or defendant for an original party may be granted if the substituted party bears a real relation of interest to the original party and no new cause of action is introduced. As the trial court correctly held, however, the foregoing rule has always been subject to the limitation that a new plaintiff may not be substituted for an original plaintiff who lacked standing to bring the suit. Statutes relating to misjoinder and nonjoinder are not applicable in such situations, and the sole remedy is a nonsuit followed by a new action brought in the name of a proper plaintiff. Bardach, 136 Va. at 173, 118 S.E. at 505. "Non-joinder means that a party has been omitted who ought to be joined with an existing party, not substituted for an existing party." Id. Regardless of its form, the substance of Chesapeake's motion in this case was for the substitution of new parties plaintiff, who would have standing to maintain the action, in lieu of Chesapeake, which lacked such standing. In Norfolk So. R. Co. v. Greenwich Corp., 122 Va. 631, 95 S.E. 389 (1918), we equated such a substitution with the assertion of a new cause of action and held an order permitting such a substitution to be reversible error. In Dillow v. Stafford, 181 Va. 483, 25 S.E.2d 330 (1943), we affirmed an order substituting new plaintiffs for the original because, and only because, the original plaintiff "had the right to bring the action, and the substituted plaintiffs stood in its very shoes." That fact, we pointed out, distinguished the case from Bardach. Dillow, 181 Va. at 486-87, 25 S.E.2d at 332. Finding no error in the trial court's ruling, we will affirm the judgment.

- 228 - Notes on Assignment and Death

Assignment of Claims. While contract actions are generally assignable (see §8.01- 13 to ¬26), personal service claims are not. When a claim is deemed assignable, it must be completely assigned, as splitting could harass the defendant with two or more suits arising from the same facts. Compare Phillips v. City of Portsmouth, 112 Va. 164, 70 S.E. 502 (1911)(generally, no splitting in assignment) with Reich v. Kimnach, 216 Va. 109, 216 S.E.2d 58 (1975)(partial assignment enforceable where there is no harassment in fact). Generally partial assignments of contract rights have been enforceable only in equity and not, over the objection of the debtor, at law. Death of Plaintiff. Generally, all causes of action survive the death of the plaintiff (or dissolution of a legal entity), through the personal representative or other substitute plaintiff must amend or the action will be discontinued. See § 8.01-18. Personal injury claims of a person who later dies as a result of the injury are in effect revived by the representative. If death resulted from the injury, the pleadings will be amended to conform to the Wrongful Death Act. Code §§ 8.01-56 and -50. If the decedent had already settled the personal injury claim, however, there will be no wrongful death claim to be pursued on behalf of the survivors. Code § 8.01-51. See Brammer v. Norfork & W. Ry., 107 Va. 206, 57 S.E. 593 (1907). Where the plaintiff dies from causes unrelated to the conduct of defendant, the cause of action survives but no wrongful death claim will lie. See Edwards v. Jackson, 210 Va. 450, 171 S.E.2d 854 (1970).

- 229 -

O. Seeking Declaratory Relief

Virginia holds to the restrictive notion that the purpose of declaratory judgments, which are creatures of statutes as set forth in Code §§ 8.01-184 through –191, is to supplement rather than to supersede ordinary causes of action and to relieve litigants of the common law rule that no declaration of rights may be judicially adjudged until a right has been violated. Green v. Goodman-Gable-Gould Company, 268 Va. 102, 597 S.E.2d 77 (2004). "The test for determining the efficacy of a declaratory judgment proceeding is whether the controversy is one that is justiciable, that is, where specific adverse claims, based upon present rather than future or speculative facts, are ripe for judicial adjustment." See River Heights Associates Limited Partnership v. Batten, 267 Va. 262, 591 S.E.2d 683 (2004). In that case the Court held that in the land development context, it is not necessary in every case where declaratory judgment relief is requested to establish that a developer has incurred a significant financial expense in developing specific plans for a development project. Rather, allegation and proof need only be sufficient to take a prospective development out of the realm of speculation. Nor must a developer have governmental approval to proceed with a project before a party adversely affected by such project may seek relief via declaratory judgment. Thus where a bill of complaint alleged that the developer expressly informed the plaintiff lot owners of his intention to commercially develop the unimproved lots, and a local architect informed one of the complainants that he had been asked to prepare a plan for development on the site and that he was scheduled to generate drawings and sketches in two months, there was an imminent threat to other lot owners in the subdivision. Thus a controversy within the contemplation of the Declaratory Judgment Act was sufficiently alleged in the bill of complaint.

USAA CASUALTY INSURANCE COMPANY v. RANDOLPH 255 Va. 342, 497 S.E.2d 744 (1998)

JUSTICE KEENAN delivered the opinion of the Court: In this appeal, we consider a procedural challenge to the use of a declaratory judgment proceeding for resolving the issue whether an employee's injury arose out of and in the course of his employment. In October 1995, Kevin Martin was working as a truck driver for Southern States Cooperative, Inc., t/a Southern States Leesburg Petroleum Services (Southern States). Martin's job required him to be "on call" to respond to customer requests for service during the weekend beginning Friday, October 13, 1995. Pursuant to company policy, Martin planned to use a company-owned truck for the period he was "on call." At the end of his regular work shift on October 13, Martin began to transfer his personal belongings from his car, which was in Southern States' employee parking lot,

- 230 - to the company-owned truck. During this process, Martin noticed that his hunting rifle was in the trunk of his car and that the rifle case was open. When Martin attempted to close the rifle case, the rifle discharged a bullet which traveled through the wall of the trunk and struck Tracy Lee Randolph, another Southern States employee, in the left leg. There is no allegation that this shooting was intentional. At the time of the shooting, Martin's car was insured by a motor vehicle liability insurance policy issued by USAA Casualty Insurance Company (USAA), which provided coverage for injuries caused by Martin's negligent or reckless use of the car. Martin's homeowner's liability insurance policy, also issued by USAA, provided coverage for injuries resulting from Martin's negligent or reckless acts. USAA denied liability under each policy for Randolph's injury on the ground that Randolph was injured on Southern States' property while Martin was in the course of his employment. Southern States' workers' compensation carrier, Southern States Underwriters, Inc., t/a Southern States Insurance Exchange (Underwriters), also denied liability for Randolph's injury, stating that the injury did not arise out of or in the course of Randolph's employment. Randolph filed a bill of complaint for declaratory judgment in the trial court against several defendants, including USAA, Southern States, Underwriters, and Kevin Martin. The bill of complaint requested a declaration that USAA was liable for Randolph's injury under either or both of the insurance policies issued by USAA. At a bench trial, Randolph's counsel informed the chancellor that the sole issue he was asking the chancellor to decide was "whether the Workers' Compensation bar applies." Randolph's counsel further stated that he "was not going to get into which one of the various USAA policies might apply." USAA and Martin (collectively, USAA) objected to Randolph's use of a declaratory judgment proceeding to resolve the issue concerning the workers' compensation bar. After hearing the evidence, the chancellor ruled that the request for declaratory relief was appropriate because the suit involved an "antagonistic assertion and denial of right." The chancellor then held that the injury did not arise out of Randolph's employment and, thus, that the Virginia Workers' Compensation Act, Code § 65.2-100 through -1310, did not bar Randolph from filing a tort action. On appeal, USAA contends that the chancellor erred in entering a declaratory judgment on the issue whether Randolph's injuries arose out of and in the course of his employment. USAA argues that declaratory judgment did not lie in this case because the suit raised an issue to be decided in a future tort action and did not involve a determination of Randolph's rights under a written instrument. Southern States and Randolph (collectively, Randolph) contend that the trial court did not err in entering a declaratory judgment because the bill of complaint requested a determination whether Randolph had a right to file a workers' compensation claim or a right to institute a personal injury action. Randolph also asserts that the declaratory judgment suit was an appropriate and efficient mechanism for joining all parties in interest for the conclusive determination of these rights. We disagree with Randolph. Under the Declaratory Judgment Act, Code § 8.01-184 through -191, circuit courts have the authority to make "binding adjudications of right" in cases of "actual controversy" when there is "antagonistic assertion and denial of right." Code §8.01-184;

- 231 - Blue Cross & Blue Shield v. St. Mary's Hosp., 245 Va. 24, 35, 426 S.E.2d 117, 123 (1993). . . The purpose of this enactment is to provide relief from the uncertainty arising out of controversies over legal rights. Code §8.01-191; Erie, 240 Va. at 170, 393 S.E.2d at 212. . . The Declaratory Judgment Act does not give trial courts the authority to render advisory opinions, to decide moot questions, or to answer inquiries that are merely speculative. St. Mary's, 245 Va. at 35, 426 S.E.2d at 123; Hughes, 240 Va. at 170, 393 S.E.2d at 212; Reisen, 225 Va. at 331, 302 S.E.2d at 531. The Act also is not to be used as an instrument of procedural fencing, either to secure delay or to choose a forum. Liberty Mut. Ins. Co. v. Bishop, 211 Va. 414, 419, 177 S.E.2d 519, 522 (1970); Williams v. Southern Bank, 203 Va. 657, 662, 125 S.E.2d 803, 807 (1962). The authority to enter a declaratory judgment is discretionary and must be exercised with great care and caution. Bishop, 211 Va. at 421, 177 S.E.2d at 524. As a rule, this authority will not be exercised when some other mode of proceeding is provided. Id. The fact that multiple actions may be avoided if a declaratory judgment is entered is not always a ground for the trial court to exercise its jurisdiction. There must also be some real necessity for the exercise of jurisdiction on this basis. Id. at 419, 177 S.E.2d at 522-23; Williams, 203 Va. at 663, 125 S.E.2d at 807. Further, when a declaratory judgment regarding a disputed fact would be determinative of issues, rather than a construction of definite stated rights, status, or other relations, commonly expressed in written instruments, the case is not appropriate for declaratory judgment. Bishop, 211 Va. at 420, 177 S.E.2d at 523; Williams, 203 Va. at 663, 125 S.E.2d at 807. Our decisions in Bishop and Williams illustrate some of these basic principles. In Bishop, two insurers which had defended and settled a wrongful death action requested entry of a declaratory judgment against Liberty Mutual Insurance Company (Liberty Mutual). The two insurers effectively contended that Liberty Mutual was liable to them because they defended, settled, and paid under their policies a claim that should have been defended, settled, and paid by Liberty Mutual. The trial court entered a declaratory judgment decreeing recovery in favor of the two insurers. On appeal, Liberty Mutual maintained that the disputed claim was not appropriate for resolution by means of declaratory judgment. We agreed because, when the petition for declaratory judgment was filed, the various claims and rights asserted had accrued and matured, and the wrongs alleged had been suffered. 211 Va. at 421, 177 S.E.2d at 524. Thus, no rights between the parties remained unsettled and other modes of proceeding were available for resolution of the dispute. See id. In Williams, a former customer of a bank threatened to file eleven actions for malicious prosecution against the bank, based on information the bank gave to a that led to the of the customer on eleven charges of larceny. When the customer was acquitted on two of the larceny charges, the remaining were terminated by nolle prosequi on motion by the prosecutor. The bank filed a petition for declaratory judgment requesting a determination whether the bank could be held liable in a civil suit for the alleged malicious prosecution. The trial court entered a declaratory judgment decreeing that the bank had made a full disclosure of all material facts to the prosecutor, and the court permanently enjoined the customer from

- 232 - instituting any malicious prosecution actions based on the bank's conduct. 203 Va. at 658-59, 125 S.E.2d at 804-05. We reversed the trial court's decree, holding that declaratory judgment did not lie because the only controversy in the suit involved a disputed issue, namely, whether the bank made a full disclosure of the facts to the prosecutor. 203 Va. at 663, 125 S.E.2d at 807. The determination of that issue, rather than an adjudication of any rights of the parties, was the true object of the proceeding. Id. We also noted that the trial court's decree improperly allowed the bank to choose its own forum in equity. Id. at 663, 125 S.E.2d at 808. The present case suffers from many of the same defects that required reversal of the decrees in Bishop and Williams. Like Bishop, the present case involves claims and rights that had accrued and matured when the bill of complaint was filed. Thus, declaratory judgment did not lie because other remedies were available to Randolph, namely, a claim for workers' compensation benefits or an action at law. See Bishop, 211 Va. at 421, 177 S.E.2d at 524. Like Williams, the present case is inappropriate for declaratory judgment because the case does not involve a determination of rights, but only involves a disputed issue to be determined in future litigation between the parties, namely, whether Randolph's injuries arose out of and in the course of his employment. The chancellor's entry of a declaratory judgment also improperly allowed Randolph to choose a forum for the determination of this issue. See Williams, 203 Va. at 663, 125 S.E.2d at 808. We find no merit in Randolph's contention that the present case is similar to our decision in Reisen. There, we were presented with an actual controversy requiring the interpretation of rights under an insurance policy. The controversy involved the insurer's duty to defend a pending tort action. We held that the determination of this coverage question was appropriate for declaratory judgment because the determination guided the parties in their future conduct in relation to each other, and saved them from jeopardizing their interests by taking undirected action incident to their rights. 225 Va. at 335, 302 S.E.2d at 533. The present case is dissimilar to Reisen because Randolph did not seek any adjudication of rights but only requested a determination of the issue whether his injuries arose out of and in the course of his employment. For these reasons, we will reverse the trial court's decree and dismiss the bill of complaint for declaratory judgment. Reversed and dismissed.

- 233 - Important Aspects of Declaratory Judgment Procedure

Declaratory Suits Against the Commonwealth. The Supreme Court has applied the bar of sovereign immunity to a declaratory judgment action. Code § 8.01-66.9, after establishing liens for payments made by the Department and other institutions for persons who sustain personal injuries, provides that Commonwealth's lien shall be inferior to any lien for payment of reasonable attorney’s fees and costs, but superior to all other liens. The section further provides that expenses for reasonable legal fees and costs shall be deducted from the total amount recovered. In an action under this section, on appeal, for the first time in the proceedings, the Commonwealth interposed an argument that sovereign immunity bars a declaratory judgment against the Commonwealth or its agencies. The Supreme Court began its analysis by holding that the Commonwealth can raise the defense of sovereign immunity for the first time on appeal because if sovereign immunity applies, the court is without subject matter jurisdiction to adjudicate the claim. As to whether the defense applies, the Court stated that only the legislature acting in its policy-making capacity can abrogate the Commonwealth’s sovereign immunity. A waiver of immunity cannot be implied from general statutory language but must be explicitly and expressly announced in the statute. In the absence of such a waiver by the legislature, the courts of this Commonwealth do not have the necessary jurisdiction to entertain an action. The Supreme Court holds that such subject matter jurisdiction cannot be waived by the Commonwealth or given to a court by agreement or inaction of the parties. Afzall v. Commonwealth, 273 Va. 226, 639 S.E.2d 279 (2007). Nor can the right to object for a want of it be lost by acquiescence, neglect, estoppel or in any other manner. Further, the want of such jurisdiction will be noticed on appeal ex mero motu. Thus the Supreme Court holds in Afzall that, as a general rule, the Commonwealth is immune from actions at law for damages and from suits in equity to restrain governmental action or to compel such action, and that sovereign immunity may also bar a declaratory judgment proceeding against the Commonwealth. In the lien action before it, the Court said that the plaintiff was seeking to compel the Commonwealth to take a reduction in the amount of its lien for payments made for the child's treatment, which would have the effect of interfering with governmental functions and, in this case, an adverse effect upon protecting the public purse. The Court found that the ultimate question in the case was whether Code § 8.01-66.9, upon which the claimant relied, evinced an intention on the part of the General Assembly to waive sovereign immunity so as to permit a party to seek judicial review by way of a motion for declaratory judgment of action taken pursuant to that Code section. It found nothing in the language of Code § 8.01-66.9 evincing an intention to waive sovereign immunity in order to permit declaratory actions. Attorney's Fees. The Supreme Court has held that the Virginia Declaratory Judgment Act does not authorize a circuit court to award attorney's fees to a prevailing litigant. The general rule in the Commonwealth is that in the absence of a statute or contract to the contrary, a court may not award attorney's fees to the prevailing party. The Court held that the provision contemplating "further relief," contained in Code § 8.01-186, does not authorize a court to award attorney's fees to a litigant. Rather, that term permits a court to enter necessary orders to implement or enforce a declaratory judgment entered by the court. It cannot be inferred that the General Assembly intended

- 234 - to authorize a court to award attorney's fees in a declaratory judgment action when the Virginia Declaratory Judgment Act fails expressly to grant such authority. See Russell County Department of Social Services v. O'Quinn, 259 Va. 139, 523 S.E.2d 492 (2000).

Jurisdiction to Award Relief as Circumstances Change. After a declaratory judgment action is filed the circumstances that caused the party seeking to have its rights and responsibilities determined by the court in equity may change. This possibility is implicitly contemplated by the provision in Code § 8.01-184 that grants the trial court jurisdiction "to make binding adjudications of right, whether or not consequential relief is, or at the time could be, claimed." The Supreme Court has held that many sorts of developments will not bar the trial court from granting relief. In part his flows from the fact that Code § 8.01-191 provides that the declaratory judgment statute is remedial in purpose and expressly directs that it be liberally interpreted. In one case, the trial court's determination regarding its continuing jurisdiction over the declaratory judgment action after settlement of the underlying tort case was based on the clear legislative mandate of Code §§ 8.01-184 and -191. The general rule is that when a court of equity has once acquired jurisdiction of a cause upon equitable grounds, it may go on to a complete adjudication, even to the extent of establishing legal rights and granting legal remedies which would otherwise be beyond the scope of its authority. Asplundh Tree Expert Company v. Pacific Employers Insurance Company, 269 Va. 399, 611 S.E.2d 531 (2005) (In a declaratory judgment action brought by an insurer to determine its motor vehicle liability policy obligations after funding settlement under a reservation of rights in a separate tort action brought against the policyholder by an injured employee in another forum, the trial court did not err in determining that it retained jurisdiction after settlement of the underlying tort action and that the insurer was not liable on the policy. The trial court properly directed the policyholder to refund to the insurer the amount tendered to fund the settlement).

Statute of Limitations. The form of a litigation, such as a declaratory judgment suit, does not affect analysis of the statute of limitations. The Supreme Court has held that the period of limitations for declaratory judgment actions is governed by the object of the litigation and the substance of the complaint, not the form in which the litigation is filed. As a result, the Court has held that a complainant will not be permitted to use the declaratory judgment statute as a vehicle to circumvent the statute of limitations applicable to the substance of a complaint. Kappa Sigma Fraternity, Inc. v. Kappa Sigma Fraternity, 266 Va. 455, 587 S.E.2d 701 (2003). Under the single-form-of-action rules in effect in 2006, this cross-reference in declaratory judgment actions to the limitations period that would apply in the underlying cause of action may mean that there are multiple periods applicable to different aspects of the case. Thus there are separate specific periods for actions at law, and in a multi-count complaint differing periods often apply to the various claims. Moreover, with the advent of a single style of civil actions in which equitable claims can and will be pled alongside legal claims, the prospect exists that the equitable "laches" doctrine that mediates the availability of the various forms of equitable relief will also affect the availability of equitable relief such as rescission or reformation in

- 235 - the declaratory judgment proceeding. On limitations questions generally, see Chapter 4 of Sinclair & Middleditch, Virginia Civil Procedure (4th ed. 2003).

Sides of Court and Declaratory Actions. One of the more important changes effected January 1 (2006) with the of new Part Three and the revision of the enabling statutes is that there is no longer any uncertainty in Virginia concerning which side of court on which to file declaratory judgment proceedings. In the past, the fact that relief in the nature of "reformation" was only available on the equity side of court led to occasional disastrous situations where years of litigation in declaratory proceedings were wasted only to find out that the case was lodged on the incorrect side of court. One of the most frightening aspects of the pre-2006 litigation landscape in Virginia was the task of determining on which side of court an action for declaratory relief be filed. In an action seeking 758,166 the plaintiff got it wrong. The answer pre- 2006 was: it depends! In Dulles Corner Properties v. Smith, 246 Va. 153 (1993), the Supreme Court noted that declaratory relief may take several forms. Some declaratory judgment actions are purely law-based actions seeking a construction of an undisputed written instrument. However, where the relief is comparable to equitable remedies, such as reformation or injunction, the pre-2006 law was that the case must be filed on the equity side. And, if there were other claims pending at law, a separate declaratory judgment action needed to be filed if the declaratory relief involved equitable elements. It seems clear that the creation of a single format for civil actions means that a declaratory judgment application is always in the right “place” and thus it can be considered on the merits, whether it amounts to a simple “statement” of what the parties’ rights are or even if it “reforms” their agreements under equitable powers.

Pleading Format. In the past, pleadings seeking declaratory relief bore many different captions as attorneys struggled to fit this form of action into former equity or law-side rules. Under the 2006 revolution in pleading and practice in Virginia, the pleading should simply be called a Complaint. The new Rules of Court do not specifically forbid the slightly more informative caption, Complaint For Declaratory Judgment, and it seems very doubtful that any adverse consequence would follow from using that caption. But the more descriptive title is not necessary, and the Rules speak only of a "Complaint" as the plaintiff s initial pleading. The test for determining the efficacy of a declaratory judgment proceeding is whether the controversy is one that is justiciable, that is, where specific adverse claims, based upon present rather than future or speculative facts, are ripe for judicial adjustment. The 2006 Rules of Court do not expressly require any different content for declaratory judgment complaints compared to all other subject matters of civil actions. However, the well-entrenched case law requiring a demonstration that there is a "real controversy" which has reached the point that one can conclude that there is an actual, and not an advisory dispute before the court, suggests that in pleading a declaratory judgment complaint the plaintiff might well wish to spell out the steps taken in efforts to mediate the problem, or avoid a dispute, and steps taken in a concrete way that show that personal or property interests are at stake as the posture of the parties exists at the time of filing.

- 236 - Jury Trial Rights in Declaratory Judgment Actions. Code § 8.01-188 provides: When a declaration of right or the granting of further relief based thereon shall involve the determination of issues of fact triable by a jury, such issues may be submitted to a jury in the form of interrogatories, with proper instructions by the court, whether a general verdict be required or not.

Under this provision the trial court may well be required to determine which of the issues is triable by a jury. In a contract case, for example, the jury may be required to hear issues of fact concerning whether there was an acceptance of an instrument, while the judge could be required to decide whether the equitable relief of rescission or reformation is warranted. From the wording of Code § 8.01-188 it is apparent that the General Assembly further recognized that in some instances, such as the rescission and reformation example, the jury could determine questions of fact, such as whether there was a mutual material mistake of fact on the part of both contracting parties, to provide an element in the analysis of the equitable relief by the trial judge.

Hypotheticals

1. T-Co., a high-tech company in this area, brought action against A, an architect who allegedly breached contractual obligations to T-Co. During the pendency of the action A dies, and his son S is appointed and qualified as administrator of his estate. T- Co. asks its counsel whether the action may be prosecuted to a conclusion or whether a new suit is necessary. 2. S, a sailor, was injured in a car accident. He was hospitalized for two months. He was temporarily released and consulted an attorney who filed suit seeking $750,000 against the driver of the vehicle causing S's injuries. S suffered a relapse, however, was hospitalized again, and died a few weeks later, leaving an elderly mother and a young wife as his survivors. They consult the attorney who filed the suit and ask what its status is, and whether they may make any claims themselves. 3. F, a 15 year-old, "borrowed" a car and had a head-on collision with P. Though he was properly served with process, F failed to appear in the resulting lawsuit, and judgment were taken against him by default, after due notice. Some months later F inherits a farm worth $50,000. May P enforce his judgment against F? 4. I, an individual, formed a close corporation called C and leased a gas station from Oil-Co., a large Texas oil company. G guaranteed the lease for I. E was employed to run the station. Claiming that events in the Middle East truncated oil supplies, Oil-Co. cut back deliveries to the C gas station. The local paper ran an article suggesting that the C station was price gouging. Since this publicity and lack of petroleum supplies had a devastating effect upon the C station, I, G and E joined with the C corporation itself in suing both Oil-Co. and the local paper. Defense counsel immediately file a plea of misjoinder of parties. How should the court rule?

- 237 -

- 238 - Chapter 5 Venue and Forum Non Conveniens

A. The Nature of Venue...... 240 Code §8.01-257 Venue Generally ...... 241 Code §8.01-258 Venue Not Jurisdictional...... 241 B. Permissible and Preferred Venue ...... 241 Distinguishing the Two Categories ...... 241 Code §8.01-260 Preferred Forum in Certain Actions...... 243 Code §8.01-261 Category A or Preferred Venue ...... 244 Code §8.01-262 Category B or Permissible Venue...... 246 C. Where Contracts Claims Arise ...... 248 Big Seam Coal Corp. v. Atlantic Coast Line Railroad ...... 248 D. Where Defendant Conducts "Substantial Business Activities" ...... 250 Meyer v. Brown...... 250 NOTES on Where Defendant Conducts Business...... 253 E. Venue in Cases with Multiple Defendants...... 254 Venue Good as to One is Good as to All...... 254 Code §8.01-263 Multiple parties...... 254 F. Objection, Transfer, and Costs...... 255 Prompt, Timely Objection Requirement...... 255 Code § 8.01-264 Venue Improperly Laid ...... 255 Code § 8.01-265 Change of Venue by Court ...... 257 Code § 8.01-266 Costs ...... 258 Code § 8.01-267 Discretion of judge ...... 258 Booth v. Broudy...... 259 Faison v. Hudson ...... 261 G. Forum Non Conveniens...... 264 Norfolk & Western Railway Co. v. Williams ...... 264 NOTE on "Nexus" and the Transfer Doctrine ...... 268 H. Forum Selection Agreements ...... 269 Paul Business Systems v. Canon U.S.A., Inc...... 269 NOTES on Specific Venue Issues...... 275 Hypotheticals………...... 277

Venue rules prescribe geographical considerations for the place of trial. The venue code provisions are intended to provide an orderly, practical and predictable method for determining the proper locale of an action or suit, with the purpose in mind to insure to a litigant, insofar as possible, the right to have a lawsuit tried in a convenient and familiar jurisdiction. See Dowdy v. Franklin, 203 Va. 7, 121 S.E.2d 817 (1961). Venue is prescribed by statute for all categories of suits in the Commonwealth, whether of the types traditionally called "local" or "transitory". The legislature has endeavored to declare in these enactments where actions against corporations as well as individuals may be brought. Virginia & S.W. Ry. v. Hollingsworth, 107 Va. 359, 58 S.E. 572 (1907).

- 239 - Venue rules allow a defendant some protection in the selection by the plaintiff of the forum location. These statutory "rights" of the defendant may be waived if not timely asserted. Moore v. Norfolk & W. Ry., 124 Va. 628, 98 S.E. 635 (1919). Conversely, by complying with the venue rules plaintiff does not obtain personal jurisdiction over a defendant, but merely selects a city or county where the court will be empowered properly to hear the action. Morgan v. Pennsylvania R.R., 148 Va. 272, 138 S.E. 566 (1927).

A. The Nature of Venue

Venue and Jurisdiction Generally. Venue and jurisdiction are completely different concepts in Virginia law, as they are in federal practice for must purposes. Jurisdiction pertains to the power of a court to hear cases of a specified type (subject matter jurisdiction) or the power of a court over the person of a defendant (personal jurisdiction). Subject matter jurisdiction exists where the statutes empower the court to hear an action involving a given subject matter and amount in controversy. Personal jurisdiction exists where service of process requirements (See Chapter 6) and Due Process concerns are satisfied. Venue is, as noted at the outset of this Chapter, a statutory concept, waivable by defendant. Where an action is filed in a court lacking subject matter jurisdiction the case should be dismissed (and steps taken will be deemed void), while the remedy for improper venue is normally a simple transfer of the action to the docket of a court in the proper locale.

Venue in Special Cases. The specific causes of action exempted from the generally non-jurisdictional operation of the venue provisions by § 8.01-259 are all subject matters where failure to lay venue correctly may cause the action to be dismissed. These topics are: A. Children. Actions for adoption (Code § 63.1-221), other Juvenile and Domestic Relations court proceedings concerning children (§16.1-243) and child custody proceedings (§ 16.1-241(A)) have critical venue provisions. B. Habeas corpus proceedings. These lie in the Circuit Court which entered the original judgment leading to detention. Under § 8.01-654(B)(1) this is probably jurisdictional. C. Tax proceedings other than those under Title 58.1 of the Code. But see Code § 8.01-261.13.

- 240 -

The important "background" sections of the Code on venue are these:

§ 8.01-257 Venue Generally. It is the intent of this chapter that every action shall be commenced and tried in a forum convenient to the parties and witnesses, where justice can be administered without prejudice or delay. Except where specifically provided otherwise, whenever the word "action(s)" is used in this chapter, it shall mean all actions at law, suits in equity, and statutory proceedings, whether in circuit courts or district courts.

§ 8.01-258 Venue Not Jurisdictional. The provisions of this chapter relate to venue --the place of trial --and are not jurisdictional. No order, judgment, or decree shall be voidable, avoided, or subject to collateral attack solely on the ground that there was improper venue; however, nothing herein shall affect the right to appeal an error of court concerning venue.

B. Permissible and Preferred Venue

Distinguishing the Two Categories

Generally. Set forth below are the Code provisions establishing numerous venue provisions, but lumping them generally into either "preferred" or "permissible"

- 241 - categories. Note that transfer among permitted venue locales can be summarized in four rules: z – If the venue chosen is not proper at all, the case will be transferred to a proper venue. z – If venue is laid in a permissible forum but a preferred venue applies, the case will be moved upon request of a party. z – if venue is permissible where laid, transfer may be ordered if the other forum is much more convenient (See Williams and associated notes below). z – if venue is initially laid in a preferred forum, it appears that there is no transfer except by consent. See § 8.01-265).

Localities. Note that the units on which venue doctrine focuses are cities or counties. Each of the venue sections contemplates that the case will be filed in the locality which meets one of the categories of the statute.

Preferred venue notes. Some aspects of preferred venue worth highlighting are:

9 When a citizen is in suit with the Commonwealth over regulatory activity the citizen's location normally controls venue, regardless of who is plaintiff or defendant. See § 8.01-261(1). 9 However, suits by a citizen against a named officer of the Commonwealth are brought where the officer has an official office. § 8.01-261(2). 9 Actions involving land are normally heard where it is. § 8.01-261(3). This implementation of an historic "local action" concept apparently includes disputes involving accountings under trust as well as title and similar actions.

Permissible venue notes. Some key permissible venue sections are: 9 Individuals. § 8.01-262(1) and (3), which permit suit against defendant where he, she or it "is": at its core, this means place of residence, employment or business. 9 Corporations. § 8.01-262(2): registered office or appointed agent for receipt of service of process. Also, under § 8.01-262(3), where the corporation regularly conducts substantial business activites. 9 Where the cause of action arose. § 8.01-262(4). For torts this is construed to mean where any part of the injury occurred. See C&O Ry v. American Exchange Bank, 92 Va. 495, 23 S.E. 935 (1896). In contract suits either the place of contracting or the place of breach will be permitted. Big Seam Coal Corp. v. Atlantic Coast Line R. Co., 196 Va. 590, 85 S.E.2d 239 (1955), below. 9 Plaintiff's residence. § 8.01-262(10). This venue locale is available in Virginia only when all defendants are unknown (as in John Doe actions) or where all are nonresidents of the Commonwealth.

- 242 -

§8.01-260 Proper Venue; Preferred Forum in Certain Actions; Permissible Forums for Other Actions. Except for those actions expressly excluded from the operation of this chapter, and subject to the provisions of §§ 8.01-264 and 8.01-265, the venue for any action shall be deemed proper only if laid in accordance with the provisions of §§ 8.01-261 and 8.01-262. REVISERS' NOTE Sections 8.01-260 to 8.01-262 can be considered together. They indicate those forums where venue is proper in any action, other than those excluded by § 8.01-259. Sections 8.01-260 to 8.01-262 are made subject to § 8.01-264 to emphasize that venue not laid in accordance with the provisions of these sections must be objected to before the action will be transferred to a court of proper venue. Also, these three sections are made subject to § 8.01-265 to establish the priority of the forum non conveniens provisions of that section over the more specific venue provisions of §§ 8.01-261 and 8.01-262. Furthermore, while § 8.01-260 states that venue is proper "only" if laid pursuant to §§ 8.01-261 and 8.01¬262, it should be understood that §§ 8.01¬264 and 8.01-265 prevent any such "preferred" or "permissible" venue from being jurisdictional. Category A (§ 8.01-261), Preferred Venue, generally lists those actions where so-called "mandatory venue" was applicable under former provisions of the Code. However, Category A (§ 8.01-261), like Category B (§ 8.01-262), does not have jurisdictional effect and improper venue is waived if not affirmatively pleaded. Category B (§ 8.01-262), Permissible Venue, lists those forums in which venue is proper in actions other than those listed in Category A and other than those excluded by § 8.01-259; thus, Category B will be applicable to most actions.

- 243 - § 8.01-261. Category A or Preferred Venue. In the actions listed in this section, the forums enumerated shall be deemed preferred places of venue and may be referred to as "Category A" in this title. Venue laid in any other forum shall be subject to objection; however, if more than one preferred place of venue applies, any such place shall be a proper forum. The following forums are designated as places of preferred venue for the action specified: 1. In actions for review of, appeal from, or enforcement of state administrative regulations, decisions, or other orders: a. If the moving or aggrieved party is other than the Commonwealth or an agency thereof, then the county or city wherein such party: (1) Resides; (2) Regularly or systematically conducts affairs or business activity; or (3) Wherein such party's property affected by the administrative action is located. b. If the moving or aggrieved party is the Commonwealth or an agency thereof, then the county or city wherein the respondent or a party defendant: (1) Resides; (2) Regularly or systematically conducts affairs or business activity; or (3) Has any property affected by the administrative action. c. If subdivisions a and b do not apply, then the county or city wherein the alleged violation of the administrative regulation, decision or other order occurred. 2. Except as provided in subdivision 1 of this section, where the action is against one or more officers of the Commonwealth in an official capacity, the county or city where any such person has his official office. 3. The county or city wherein the subject land, or a part thereof, is situated in the following actions: a. To recover or partition land; b. To subject land to a debt; c. To sell, lease or encumber the land of persons under disabilities; d. [Repealed.] e. To sell wastelands; f. To establish boundaries; g. For unlawful entry or detainer; h. For ejectment; or i. To remove clouds on title. 4. [Reserved.] 5. In actions for writs of mandamus, prohibition, or certiorari, except such as may be issued by the Supreme Court, the county or city wherein is the record or proceeding to which the writ relates. 6. In actions on bonds required for public contract, the county or city in which the public project, or any part thereof, is situated. 7. In actions to impeach or establish a will, the county or city wherein the will was probated, or, if not probated at the time of the action, where the will may be properly offered for probate. 8., 9. [Repealed].

- 244 - 10. In actions on any contract between a transportation district and a component government, any county or city any part of which is within such transportation district. 11. In attachments, a. With reference to the principal defendant and those liable with or to him, venue shall be determined as if the principal defendant were the sole defendant; or b. In the county or city in which the principal defendant has estate or has debts owing to him. 12. [Repealed.] 13. a. In any action for the collection of state, county or municipal taxes, any one of the following counties or cities shall be deemed preferred places of venue: (1) Wherein the taxpayer resides; or (2) Wherein the taxpayer owns real or personal property; or (3) Wherein the taxpayer has a registered office, or regularly or systematically conducts business; or (4) In case of withdrawal from the Commonwealth by a delinquent taxpayer, wherein venue was proper at the time the taxes in question were assessed or at the time of such withdrawal. b. In any action for the correction of an erroneous assessment of state taxes and tax refunds, any one of the following counties or cities shall be deemed preferred places of venue: (1) Wherein the taxpayer resides; (2) Wherein the taxpayer has a registered office, or regularly or systematically conducts business; (3) Wherein the taxpayer's real or personal property involved in such a proceeding is located; or (4) The Circuit Court of the City of Richmond. 14. In proceedings by writ of quo warranto: a. The city or county wherein any of the defendants reside; b. If the defendant is a corporation, the city or county where its registered office is or where its mayor, rector, president or other chief officer resides; or c. If there is no officer or none of the defendants reside in the Commonwealth, venue shall be in the City of Richmond. 15. In proceedings to award an injunction: a. To any judgment or judicial proceeding of a circuit court, venue shall be in the court in the county or city in which the judgment was rendered or such proceeding is pending; or b. To any judgment or judicial proceeding of a district court, venue shall be in the circuit court of the county or city in which the judgment was rendered or such proceeding is pending; or c. To any other act or proceeding, venue shall be in the circuit court of the county or city in which the act is to be done, or being done, or is apprehended to be done or the proceeding is pending. 16. [Repealed.] 17. In disbarment or suspension proceedings against any attorney-at-law, in the county or city where the defendant: a. Resides;

- 245 - b. Has his principal office or place of practice when the proceeding is commenced; c. Resided or had such principal office or place of practice when any misconduct complained of occurred; or d. Has any pending case as to which any misconduct took place. 18. In actions under the Virginia Tort Claims Act, Article 18.1 (§ 8.01- 195.1 et seq.) of Chapter 3 of this title: a. The county or city where the claimant resides; b. The county or city where the act or omission complained of occurred; or c. If the claimant resides outside the Commonwealth and the act or omission complained of occurred outside the Commonwealth, the City of Richmond. 19. In suits for annulment, affirmance or divorce, the county or city in which the parties last cohabited, or at the option of the plaintiff, in the county or city in which the defendant resides, if a resident of this Commonwealth, and in cases in which an order of publication may be issued against the defendant under § 8.01-316, venue may also be in the county or city in which the plaintiff resides. 20. In distress actions, in the county or city when the premises yielding the rent, or some part thereof, may be or where goods liable to distress may be found.

REVISERS' NOTE Category A lists certain actions and denominates specific forums as the proper venue for those actions (subject to §§ 8.01¬264 and 8.01-265). Under former Virginia statutes and case law, in the situations listed in Category A, venue was generally exclusive or mandatory, and timely objection to venue improperly laid would result in dismissal of the action. Also, if no timely objection were brought and such an action proceeded to judgment, such judgment was void and subject to collateral attack. Thus, mandatory venue related more to jurisdiction than to venue. To further clarify the distinction between venue and jurisdiction, Category A uses the term "preferred" venue to refer to those situations in which venue had heretofore generally been denominated as "mandatory" or "exclusive." "Preferred" venue is not jurisdictional since, under §§ 8.01-258 and 8.01-264, dismissal is not available as a remedy for improper venue and a judgment rendered cannot be voided or collaterally attacked on such grounds. Instead, upon timely objection, the action shall be transferred to a "preferred" forum under this section, and, if no timely objection is made, the venue defect is waived. . . .

§ 8.01-262 Category B or Permissible Venue In any actions to which this chapter applies except those actions enumerated in Category A where preferred venue is specified, one or more of the following counties or cities shall be permissible forums, such forums being sometimes referred to as "Category B" in this title: 1. Wherein the defendant resides or has his principal place of employment or, if the defendant is a corporation, wherein its mayor, rector, president or other chief officer resides;

- 246 - 2. Wherein the defendant has a registered office, has appointed an agent to receive process, or such agent has been appointed by operation of the law; or, in case of withdrawal from this Commonwealth by such defendant, wherein venue herein was proper at the time of such withdrawal; 3. Wherein the defendant regularly conducts substantial business activity, or in the case of withdrawal from this Commonwealth by such defendant, wherein venue herein was proper at the time of such withdrawal; 4. Wherein the cause of action, or any part thereof, arose; 5. In actions to recover or partition personal property, whether tangible or intangible, the county or city: (a) Wherein such property is physically located; or (b) Wherein the evidence of such property is located; (c) And if subdivisions 5(a) and 5(b) do not apply, wherein the plaintiff resides. 6. In actions against a fiduciary as defined in § 8.01-2 appointed under court authority, the county or city wherein such fiduciary qualified; 7. In actions for improper message transmission or misdelivery wherein the message was transmitted or delivered or wherein the message was accepted for delivery or was misdelivered; 8. In actions arising based on delivery of goods, wherein the goods were received; 9. If there is no other forum available in subdivisions 1 through 8 of this category, then the county or city where the defendant has property or debts owing to him subject to seizure by any civil process; or 10. In actions in which all of the defendants are unknown or are nonresidents of the Commonwealth, or if there is no other forum available under any other provisions of § 8.01-261, or this section, then the county or city where any of the plaintiffs reside.

REVISERS' NOTE Category B, permissible venue, is applicable to most actions --specifically to those actions for which no preferred forum is designated in Category A, § 8.01-261, and which are not excluded by § 8.01-259. The provision that "one or more" of the forums listed in subsections 1 through 9 are permissible, gives the plaintiff the choice of the forums enumerated. Subsection 10 is a last resort provision, giving the plaintiff a forum where no forum is available under any other provision of §§ 8.01-260 to 8.01-262. Together with § 8.01-263, subsection 1 incorporates former § 8-38 (1) (i.e., the residence of any defendant) and adds the defendant's place of employment. Section 16.1-76 provides for venue at the defendant's place of employment in actions in general district courts, and subsection 1 provides the same venue for all courts. Subsection 2 incorporates the substance of former § 8-38 (2) and (6) and extends these provisions to all defendants, i.e., it provides plaintiffs with at least one forum against partnerships, unincorporated associations, and individuals, as well as corporations, which are engaged in activities requiring registration or appointment of agents for service of process. The provision for "principal office" in former § 8-38 (2) is deleted as redundant because it is covered in § 8.01-262 (3); similarly, the provision for venue where a corporation's "mayor, rector, president or other chief officer resides" was deleted since subsection 1 of § 8.01-262 and subsections 3 and 10 of § 8.01-262, combine to provide at least one forum for the plaintiff against resident or nonresident defendants generally. While subsection 3 has no statutory antecedent, it establishes a logical forum when considered in the context of fairness and convenience of the parties.

- 247 - Subsection 4 incorporates former § 8-39. With the adoption of statewide service of process, § 8.01-292, venue based on where the cause of action arose will no longer be subject to a potential process limitation. Cf. former § 8-47. Subsection 5 reflects common-law practice in that the most convenient forum for such actions is often the forum wherein such property is located. Subsection 6 is essentially former § 8-38 (5). [Venue under this subsection is the same as venue based on a fiduciary's "residence" under proposed subsection 1. Dowdy v. Franklin, 203 Va. 7, 121 S.E.2d 817 (1961). Venue based on the fiduciary's place of employment under proposed subsection 1 can, however, be different than that based on the place of qualification or "residence."] Subsection 7 incorporates § 56-474 by providing forums in actions against telephone and telegraph companies for improper transmission of messages. Subsection 8 extends § 3.1-720 to make the place of receipt a place of permissible venue in any action based on the delivery of goods. Subsection 9 is primarily applicable to actions where seizure of property is used as a means of bringing a nonresident defendant before the court. The forums already available to the plaintiff under subsections 1 through 8 will usually encompass the place where the defendant has property or debts subject to seizure. Only when no other forum is available under these subsections will the location of defendant's debts or property become a basis of venue. Subsection 10 provides the plaintiff with at least one forum, i.e., in the county or city where he resides when all the defendants are nonresidents or are unknown and when there is no other forum available under any other provision of §§ 8.01-260 to 8.01-262. This subsection includes the former venue provisions of the Virginia long-arm statutes, § 8-81.4, and the nonresident and unknown motor vehicle statutes, former §§ 8-38 (6a) and (6b), 38.1¬381 (e).

C. Where Contracts Claims Arise

In Big Seam Coal Corp. v. Atlantic Coast Line Railroad, 196 Va. 590, 85 S.E.2d 239 (1955), the Supreme Court held that contract claims “arise” for venue purposes in two places: where the contract was “made” and where it was breached. Under the arrangements, the defendant was supposed to buy shipments of coal. The Court said: While Mitchell said that he had had oral negotiations with Kelly in Wise county, he was clear and positive in his testimony that these negotiations were merely preliminary; that he wrote Kelly a letter enclosing a copy of the agreement as he understood it to be; and that Kelly made certain minor changes in the copy of the contract, returned it to Mitchell, who put it in final form, signed it, and mailed copies to Kelly at Bramwell. Kelly signed the agreement and returned a copy to Mitchell by mail. This evidence warranted the trial court in finding that the contract was not made in Wise county; that the negotiations between the parties in Wise county were merely preliminary to a contract which the parties understood would be reduced to writing, and that such writing was evidence of the final agreement

- 248 - between the parties. Boisseau v. Fuller, 96 Va. 45, 46, 47, 30 S.E. 457; Adams v. Hazen, 123 Va. 304, 319, 320, 96 S.E. 741. Our next inquiry is whether the defendant has carried the burden of proving that the contract was not breached by it in Wise county. The trial court seems not to have passed on this issue, but assumed that proof that the contract was not made in Wise county was sufficient to defeat [proper venue]. Mitchell testified that it was the understanding between the parties that coal was to be shipped on monthly orders sent by his office to Fourseam, and that this had customarily been done. Hence, the defendant argues that its breach, if any, of the contract occurred at Wilmington when the defendant failed to forward orders for coal as specified in the contract. But this is not the only manner in or place at which a breach by the defendant may have occurred. According to the terms of the contract coal was to be shipped "F.O.B. mine" which was located in Wise county. Kelly testified that the defendant "continually refused * * * after the first twelve months period" to accept shipments of coal which had been loaded on cars at the mine to be forwarded to the defendant; that "our sidetracks were continually loaded with coal to Mr. Mitchell's account, and he refused to let them ship it. He told them not to accept the shipments of the coal." This testimony of Kelly is uncontradicted. It is true that Mitchell testified that the defendant "did not refuse to take any coal shipped by Big Seam," but as Kelly pointed out, this was quite a different matter from Mitchell's refusal to accept shipments at the mine. The failure of Mitchell to deny that the defendant refused to accept these shipments is significant in the light of the allegations of such refusal in each motion for judgment [now "complaint"]. Thus, it appears that the defendant failed to prove that there was no breach of the contract by it in Wise county. On the other hand, the uncontradicted evidence is that the defendant did breach the contract in that county, in that it refused to accept shipments of coal which were tendered to it at the mine. . .

- 249 - D. Where Defendant Conducts "Substantial Business Activities"

MEYER v. BROWN 256 Va. 53, 500 S.E.2d 807 (1998)

JUSTICE COMPTON delivered the opinion of the Court: In this appeal of a judgment in favor of a plaintiff in a personal injury action, the dispositive question is whether the trial court erred in overruling the defendant's objection to venue. In October 1994, appellee Reginald D. Brown, the plaintiff below, was injured in a collision in Prince George County between a motorcycle he was operating and a motor vehicle driven by appellant Robert E. Meyer, the defendant below. In October 1996, the plaintiff filed the present negligence action against defendant in the Circuit Court of the City of Richmond seeking recovery in damages for his injuries. The defendant filed an objection to venue and moved the trial court to transfer the action to either the Circuit Court of Prince George County or the Circuit Court of Chesterfield County. The defendant asserted that venue was not proper in the City of Richmond because the accident happened in Prince George County and defendant "resides and works in Chesterfield County." Following a hearing, at which the parties presented defendant's deposition on the issue, the trial court overruled the objection. The case proceeded to trial before a jury, which fixed plaintiff's damages at $ 1 million. The court entered judgment on the verdict and we awarded defendant this appeal. Defendant assigns three errors, but we shall discuss only the second: "The court erred in ruling that [defendant] was subject to venue in the City of Richmond when the accident sued upon happened in Prince George County and [defendant] lived and worked in Chesterfield County." Code §8.01-260 provides, as pertinent to this appeal, that "the venue for any action shall be deemed proper only if laid in accordance with the provisions of § 8.01-261 and 8.01-262." Code §8.01-261, enumerating forums deemed "preferred" places of venue, is inapplicable here. Code §8.01-262, enumerating "permissible" forums, applies. In subsection (3), the statute [provided at the time of this decision] that a permissible forum shall be a county or city "wherein the defendant regularly conducts affairs or business activity." The question then becomes whether, under the facts presented, this defendant regularly conducted affairs or business activity in the City of Richmond. According to defendant's deposition testimony, given upon examination by plaintiff's attorney, defendant was a 20-year employee of Tredegar Industries, which is "basically an aluminum and plastics company." The defendant, a resident of Chesterfield County, had worked at the company's Chesterfield County business location since 1989. He was Tredegar's "insurance manager," administering company property and casualty insurance. Defendant's employer owned no facility within the City of Richmond.

- 250 - Defendant's employment required him "to go into" the City "on occasion" to confer with two separate insurance brokers, which maintained offices within the City. He would visit one broker "not more than once a year" and would "be in the office" of the other "maybe six times during the year." Visits to the brokers were "spaced out" during the year but occurred "a little more often in the fall" in connection with discussions regarding January 1 renewals of insurance contracts. Defendant's job duties also required him to attend insurance seminars "perhaps" three times a year at private clubs within the City. Defendant also testified he travelled through the City "twice a year, perhaps" on "pleasure" trips en route to Northern Virginia to visit a son. Additionally, he said, he was "in the City of Richmond either to pass through or stop somewhere for whatever reason no more than four or five times in a year on average." According to the testimony, defendant "never" enters the City for entertainment, for "shopping," or for medical attention. He belongs to no professional or social organizations located within the City and he has not been in the City "within the last two years at any time for a social or recreational purpose of any kind." Urging affirmance of the judgment, the plaintiff argues the trial court did not abuse its discretion in retaining venue. According to plaintiff, the "deposition transcript describes uniform business activities and affairs that the defendant conducts on a regular basis within the City of Richmond." Elaborating, plaintiff contends "defendant's activities in the City of Richmond are usual and customary by occurring approximately once per month for business purposes in addition to six or seven visits per year for personal affairs, occur at regular intervals because they are evenly distributed throughout the year, and are regular in destination because his almost monthly trips pursuant to his employment are to one of two businesses on seven occasions and to one of two clubs for educational seminars on the remaining occasions, such that these routine activities are clearly 'regular' business activity or affairs, according to the plain language of Virginia Code §8.01-262(3)." We disagree. An objection to venue is addressed to the sound discretion of the trial court, and the court's action in overruling the objection will not be reversed on appeal unless the record affirmatively reflects an abuse of discretion. See Norfolk and W. Ry. Co. v. Williams, 239 Va. 390, 392, 389 S.E.2d 714, 715 (1990). The party objecting to venue has the burden of establishing that the chosen venue is improper. The defendant has met that burden in this case, even though the facts were developed by the plaintiff. In plain language, the General Assembly has specified that permissible venue under these circumstances shall be in the county or city "wherein the defendant regularly conducts affairs or business activity." The customary meaning of the noun "affairs" in this context is, "commercial, professional, or public business," Webster's Third New International Dictionary 35 (1971), and "[a] person's concerns in trade or property; business," Black's Law Dictionary 57 (6th ed. 1990). The term refers to employment- related or personal business dealings as opposed to activity that is purely personal, such as recreational pursuits. Therefore, the evidence of defendant's pleasure trips through the City to visit a son and of his passing through the City or stopping there "for whatever reason" fails to demonstrate that defendant "conducts affairs or business activity" within the City.

- 251 - Thus, the issue remains whether evidence of defendant's seven visits per year to insurance brokerage firms and three appearances per year at business seminars qualifies under the statute as "regularly" conducting affairs or business activity within the City. We hold it does not. The customary meaning of the adverb "regularly" in this context is, "in a regular, orderly, lawful, or methodical way," Webster's 1913. The customary meaning of the adjective "regular" in this context is, "Steady or uniform in course, practice, or occurrence; not subject to unexplained or irrational variation." Black's 1285. Indeed, we have said, "In common parlance, a 'regularly' employed person is one required to work every working day. Similarly, a person 'regularly required to perform service at night' is one required to work at night every working day." Gomes v. City of Richmond, 220 Va. 449, 452, 258 S.E.2d 582, 584 (1979). Regular action is more frequent than casual or occasional action. The evidence shows that defendant's activity within the City of Richmond on behalf of his employer was merely casual or occasional, and not conducted in an orderly, methodical way. Significantly, defendant said he was required to enter the City "on occasion" to confer with the brokers, these sporadic visits being "spaced out" during the year but occurring "more often in the fall." In sum, defendant's activity in the City was not so frequent as to be performed "regularly" within the meaning of §8.01-262(3). Accordingly, because the record affirmatively reflects the trial court abused its discretion in refusing to sustain defendant's objection to venue, the judgment appealed from will be reversed and the case will be remanded for a new trial. Upon remand, the trial court shall conduct a hearing and shall order this action transferred to either Prince George County or Chesterfield County, in accordance with the provisions of Code §8.01-264. Reversed and remanded.

- 252 -

Notes on Where Defendant Conducts Business

Emphasized Language. Subdivision (3) of the permissible venue statute has been revised since this opinion was issued, such that it authorizes the assertion of venue in a locale "[w]herein the defendant regularly conducts substantial business activity. . . " No significant change in the interpretation of the "conducting business" provision is expected. See Code § 8.01-262(3). Owners/Officers of Small Companies. In Barnett v. Kite, 271 Va. 65, 624 S.E.2d 52 (2006), a personal injury action where plaintiff alleged that venue was proper due to defendant's status as the majority shareholder of a closely-held corporation regularly conducting business within the chosen forum, the circuit court erred in overruling defendant’s objection to venue. The corporation was not shown to be the defendant's alter ego, and the evidence failed to establish that defendant personally conducted business on a regular basis in the chosen forum sufficient to permit an action against him in his individual capacity to proceed there. Individuals vs. Entities. The Supreme Court holds in Barnett that the "conducts business" statutory standard unambiguously refers to the affairs or business activity conducted by “the defendant,” not to the affairs or business activity conducted by a corporation in which the defendant was a majority shareholder. This distinction is a critical one in the instant case because the defendant in the present action was sued in his personal capacity, and the defendant's corporation was not named as a party defendant. The Court noted that in Virginia proposition is elementary that a corporation is a legal entity entirely separate and distinct from the shareholders or members who compose it. This principle is applicable even when the corporation is owned totally by a single person, unless the corporation is held to be the alter ego, alias, stooge, or dummy of the individual shareholder. The Court also found that the record in the case established that during the two-year period before the motion for judgment was filed, defendant had minimal personal contacts in the selected forum and traveled there only occasionally to consult with his attorneys concerning this pending litigation, and that his supervisory and other job-related activities were conducted at the corporation's facilities located in neighboring counties. This evidence therefore failed to establish that defendant personally conducted business activities or affairs on a regular basis in the selected forum. Based on this record, the circuit court abused its discretion in refusing to sustain the objection to venue.

- 253 - E. Venue in Cases with Multiple Defendants.

Venue Good as to One is Good as to All

Multiple parties. Venue must only be proper as to one or more defendants in multi-party cases. Clearly the best course is to select one of the preferred forums available as to at least one of the defendants. Where some defendants are resident within Virginia and some not, a preferred venue as to one of the residents should be selected. Where no preferred venue suggests itself, plaintiff may select any proper (permissible) venue for any of the parties defendant. See § 8.01-263. Note that a plaintiff will not be allowed to abuse the favorable aspects of the multiparty venue rule by including a defendant solely for the purpose of validating venue, and then dismissing that particular defendant. In such a circumstance, the remaining defendants would be permitted within 10 days to make a challenge to the propriety of venue in the locale where the case is pending.

§ 8.01-263. Multiple parties In actions involving multiple parties, venue shall not be subject to objection: 1. If one or more of the parties is entitled to preferred venue, and such action is commenced in any such forum; provided that in any action where there are one or more residents and one or more nonresidents or parties unknown, venue shall be proper (preferred or permissible, as the case may be) as to at least one resident defendant; 2. In all other cases, if the venue is proper as to any party. REVISERS' NOTE Section 8.01-263 is necessary in order for the other venue provisions to function effectively in multiple party situations. Thus, by subsection 1, where any party is entitled to a preferred forum under § 8.01-261, venue will not be transferred pursuant to §§ 8.01-264, 8.01- 265, if the action is commenced in a preferred forum to which any other party is entitled pursuant to § 8.01-261. The proviso to subsection 1 reflects former § 8-38 (7), and gives preference to resident defendants when both resident and nonresident defendants are involved in an action. Where subsection 1 does not apply, subsection 2 simplifies matters by recognizing no priorities. It allows the action to be maintained so long as venue is proper as to any one party.

- 254 - F. Objection, Transfer, and Costs.

Prompt, Timely Objection Requirement

Objections to venue. The objection that venue is "improper" obviously means one of two things under the Virginia Code: either the court selected by plaintiff is not available under either the preferred or permissible sections, or the suit has been laid in a permissible forum when a preferred forum is available. See § 8.01-260, -264. A motion challenging venue (hence asking for transfer) must be made timely or the defendant's right to insist on compliance with venue sections will be lost. In Circuit Court the time for raising venue objections is generally 21 days from commencement of the action or the date for filing responsive pleadings. If a party whose presence conferred venue is dismissed, remaining parties have 10 days from the dismissal to challenge continued venue in the forum. § 8.01-264(B). In General District Court venue objections are due on or before the day of trial. While in general any form of motion (and even letters) will suffice, in order to be cognizable on appeal to the Circuit Court, venue must be raised in an affidavit of substantial defense. Venue objections are invited in General District Court proceedings by the rule that the warrant or complaint which commences the action must alert the defendant to the right to proper venue and the option to object. See Code § 16.1-92. It appears that a motion challenging venue must deny all grounds which would lay proper venue in the forum, and must further identify a proper forum elsewhere in the Commonwealth. See § 8.01-264, -276. A prompt hearing of the motion is expected, focusing on the defendants initially named (to preclude strategic addition of parties while the motion is pending, to defeat an otherwise valid motion).

§ 8.01-264 Venue Improperly Laid; objection A. Venue laid in forums other than those designated by this chapter shall be subject to objection, but no action shall be dismissed solely on the basis of venue if there be a forum in the Commonwealth where venue is proper. In actions where venue is subject to objection, the action may nevertheless be tried where it is commenced, and the venue irregularity shall be deemed to have been waived unless the defendant objects to venue by motion filed, as to actions in circuit courts, within twenty-one days after service of process commencing the action, or within the period of any extension of time for filing responsive pleadings fixed by order of the court. As to actions in general district courts, a motion objecting to venue, which may be in the form of a letter or other written communication, shall be filed with or received by the court on or before the day of trial. Waiver by any defendant shall not constitute waiver for any other defendant entitled to object to venue. Such motion shall set forth where the defendant believes venue to be proper, may be in writing, and shall be promptly heard by the court upon reasonable notice by any party. The court shall hear the motion only on the basis of the action as commenced against the original defendant and not on the basis of subsequent joinder or intervention of any other party. If such motion is sustained, the court shall

- 255 - order the venue transferred to a proper forum under the appropriate provisions of §§ 8.01-195.4, 8.01-260, 8.01-261 and 8.01-262 and shall so notify each party. B. In the event a party defendant whose presence created venue is dismissed after the parties are at issue, then the remaining parties defendant may object to venue within ten days after such dismissal if the remaining defendants can demonstrate that the dismissed defendant was not properly joined or was added as a party defendant for the purpose of creating venue. However, nothing in this section shall impair the right of the court under § 8.01-265 to retain the action for trial on motion of a plaintiff and for good cause shown. C. The initial pleading, in any action brought in a general district court, shall inform the defendant of his right to object to venue if the action is brought in any forum other than that specified in §§ 8.01-261, 8.01-262, or § 8.01-263. The information to the defendant shall be stated in clear, nontechnical language reasonably calculated to accomplish the purpose of this subsection. D. Where a suit described in subdivision 19 of § 8.01-261 is filed in a venue that is not described therein, the court, on its own motion and upon notice to all parties, may transfer the suit to a venue described in such subdivision provided the transfer is implemented within sixty days after service of process upon all parties.

REVISERS' NOTE Section 8.01-264 changes former law and requires that where an appropriate objection is made to improperly laid venue, the case shall be transferred to a proper forum rather than be dismissed. The party responsible for improper venue is liable for costs. § 8.01-266. The section provides that improper venue, whether "preferred" or "permissible," is waived if the defendant does not make timely objection. The result is that improper venue is not a fatal defect. Objection to venue shall be made by motion setting forth where venue is proper. See also § 8.01-276. It shall be promptly heard by the court. Objection is timely if made on or before the day of trial if the action is commenced in a general district court. Similarly, objection to venue is timely if made within 21 days after service of process commencing an action in a circuit court or within such other time that such court may order for filing responsive pleadings. This changes former law; e.g., this objection is timely even if other pleadings are filed by the defendant prior to the expiration of the time for objection. If a defendant's motion is not timely, the objection shall be waived but in cases of multiple defendants, the waiver shall not be binding on any other defendant whose motion is timely filed.

- 256 -

Text of The Change-of-Venue Statute in Virginia. While venue statutes exist, in general, to protect defendants by prescribing a menu of options from which a plaintiff may choose and appropriate venue – and venue challenge motions are almost always filed by a defendant – in 2007 the General Assembly made a series of amendments to Code § 8.01-265 to permit "any party" to make a motion and show good cause why the action should be dismissed under subsection (i) or transferred under subsection (ii) to any fair and convenient forum having jurisdiction within the Commonwealth. Under the present Code provision, good cause is "deemed to include, but not to be limited to, the agreement of the parties or the avoidance of substantial inconvenience to the parties or the witnesses, or complying with the law of any other state or the United States." The last-quoted phrase was added in 2007, recognizing that there may be a venue prescribed by another jurisdiction whose law controls the merits of a cause of action:

§ 8.01-265 Change of Venue by Court. In addition to the provisions of § 8.01-264 and notwithstanding the provisions of §§ 8.01-195.4, 8.01-260, 8.01-261 and 8.01-262, the court wherein an action is commenced may, upon motion by any party and for good cause shown, (i) dismiss an action brought by a person who is not a resident of the Commonwealth without prejudice under such conditions as the court deems appropriate if the cause of action arose outside of the Commonwealth and if the court determines that a more convenient forum which has jurisdiction over all parties is available in a jurisdiction other than the Commonwealth or (ii) transfer the action to any fair and convenient forum having jurisdiction within the Commonwealth. Such conditions as the court deems appropriate shall include, but not be limited to, a requirement that the defendant agree not to assert the statute of limitations as a defense if the action is brought in a more convenient forum within a time specified by the court. The court, on motion of any party and for good cause shown, may retain the action for trial. Except by agreement of all parties, no action enumerated in Category A, § 8.01-261, shall be transferred to or retained by a forum not enumerated in such category. Good cause shall be deemed to include, but not to be limited to, the agreement of the parties or the avoidance of substantial inconvenience to the parties or the witnesses, or complying with the law of any other state or the United States. The provisions of (i) of this section shall not apply to causes of action which accrue under § 8.01-249(4).

REVISERS' NOTE Section 8.01-265 consolidates the forum non conveniens transfer provisions of former §§ 8-38 (10) and 8-157 (a) and readopts former § 8-158 which was repealed in 1966. Venue may be generally transferred if it is improperly laid under §§ 8.01-260, 8.01-261 and 8.01-262 and objection is made by the defendant pursuant to § 8.01-264. However, if the venue is preferred and is properly laid under § 8.01-261, the court may transfer the case only upon agreement of all parties. If an action is not within § 8.01-261, though the venue may be improperly laid the court may, on motion of the plaintiff and for good cause, retain the action for trial. The definition of good cause encompasses former § 8-38 (10) (provision for transfer where judge is

- 257 - interested in case) as well as the convenience of witnesses and parties and the interest of justice of former § 8-157 (a). The adjectives "fair and convenient" used to describe the transferee forum give more guidance than "any other forum" used in former § 8-157 (a). The words "having jurisdiction" connote jurisdiction over the subject matter of the proceeding; and no court in the Commonwealth is prevented by any provision of this chapter from having such jurisdiction.

§ 8.01-266 Costs. In any action which is transferred or retained for trial pursuant to this chapter, the court in which the action is initially brought may award an amount necessary to compensate a party for such inconvenience, expense, and delay as he may have been caused by the commencement of the suit in a forum to which an objection, pursuant to § 8.01-264, is sustained or by the bringing of a frivolous motion to transfer. In addition, the court may award those attorney's fees deemed just and reasonable which are occasioned by such commencement of a suit or by such motion to transfer. The awarding of such costs by the transferor court shall not preclude the assessment of costs by the clerk of the transferee court.

REVISERS' NOTE

Section 8.01-266 provides sanctions court's decision concerning venue. as a remedy for improper venue. . . Additionally, the court is granted discretion REVISERS' NOTE to award attorney's fees. The costs to be imposed are only those which have been Section 8.01-267 provides that actually incurred up to the point in time of certain discretionary decisions of the trial the granting of transfer or denial of such a judge may be appealable only for abuse of motion. If transfer of the action is granted, costs should include those fees of the transferror court necessary to implement the 8.01-264); and (2) the amount of costs order. Thereafter costs are to be awarded in awarded upon transfer (§ 8.01-266). accordance with chapter 3 of Title 14.1.

§ 8.01-267 Discretion of judge. Both the decision of the court transferring or refusing to transfer an action under § 8.01-265 and the decision of the court as to amount of costs awarded under § 8.01-266 shall be within the sound discretion of the trial judge. However, nothing herein shall affect the right to assign as error a court's decision concerning venue.

REVISERS' NOTE Section 8.01-267 provides that certain discretionary decisions of the trial judge may be appealable only for abuse of such discretion: (1) whether to transfer a case for reasons of forum non conveniens (§ 8.01-264); and (2) the amount of costs awarded upon transfer (§ 8.01-266). While neither transfer nor refusal to transfer are immediately appealable, the trial judge's decision is ultimately reviewable on the grounds that he abused his discretion, or that the forum to which the action was transferred or in which the case was allowed to remain was not a proper place of venue under §§ 8.01-260 to 8.01-262.

- 258 - BOOTH v. BROUDY 235 Va. 457, 369 S.E.2d 165 (1988)

CHIEF JUSTICE CARRICO delivered the opinion of the Court. This case is here upon the appeal of John Wilkes Booth, III, the defendant, from a judgment based on a jury verdict in favor of Steven L. Broudy, the plaintiff, for $ 35,000. The sole question for decision is whether the trial court erred in refusing to transfer venue. The plaintiff was injured in an automobile accident on May 12, 1983. The accident occurred in the City of Suffolk. The defendant was a resident of Suffolk and the plaintiff a resident of the City of Virginia Beach. The plaintiff filed suit in the Circuit Court of the City of Norfolk. By proper motion, the defendant objected to venue in Norfolk and moved that venue be changed to Suffolk. Holding that it would be "more convenient" to the plaintiff's medical witness and the latter's patients if trial were held in Norfolk, the trial court denied the motion and retained the case for trial. The ground assigned by the trial court for denying the defendant's motion is not listed as a basis for venue in either the preferred venue statute, Code § 8.01-261, or the permissible venue statute, Code § 8.01-262. The county or city where the defendant resides is a permissible forum, Code § 8.01-262(1), as is the county or city where the cause of action, or any part thereof, arose, Code § 8.01-262(4). Notwithstanding the provisions of Code §§ 8.01-261 and -262, however, a trial court wherein a cause of action is commenced may, "for good cause shown," retain the action for trial. Code § 8.01-265. "Good cause shall be deemed to include, but not to be limited to, . . . the avoidance of substantial inconvenience to the parties or the witnesses." Id. Under Code § 8.01-267, a decision transferring or refusing to transfer an action pursuant to § 8.01-265 shall be within the sound discretion of the trial judge. Section 8.01-267 also provides, however, that "nothing [therein] shall affect the right to assign as error a court's decision concerning venue." Furthermore, a Revisers' Note to § 8.01- 267 states that "the trial judge's decision is . . . reviewable on the grounds that he abused his discretion, or that the forum to which the action was transferred or in which the case was allowed to remain was not a proper place of venue under §§ 8.01-260 to 8.01-262." There was no showing that trial in Suffolk would result in "substantial inconvenience to the parties or the witnesses," only that trial in Norfolk would be "more convenient" to the plaintiff's medical witness and his patients. Hence, this Court holds that the ground assigned by the trial judge for retaining the action for trial in Norfolk did not constitute good cause under Code § 8.01-265. And, because the absence of good cause appears as a matter of law, there was no basis for the exercise of discretion by the trial court. This Court treats the case, therefore, as one involving plain error, within the contemplation of Code § 8.01-267. Accordingly, we will reverse the judgment appealed from, set aside the verdict of the jury, and remand the case to the trial court with direction to transfer venue to the Circuit Court of the City of Suffolk for further proceedings.

- 259 -

- 260 - FAISON v. HUDSON 243 Va. 413, 417 S.E.2d 302 (1992)

JUSTICE STEPHENSON delivered the opinion of the Court: In this appeal, we determine whether the trial court erred in overruling the defendant's objection to venue . . . On June 4, 1990, William Ivory Faison filed a motion for judgment in the City of Richmond against Gail M. Hudson, administrator of the estate of her deceased husband, Ulus Grant Hudson, Jr. (the Administrator). On August 23, 1990, service of process was obtained on the Administrator. In his motion for judgment, Faison alleged that he sustained personal injuries and property damage which were proximately caused by Hudson's negligent operation of a motor vehicle [in Richmond]. On September 11, 1990, the Administrator filed an objection to venue and a motion to transfer the case to Henrico County. It was not until February 7, 1991, however, that the Administrator gave notice to Faison that a hearing on the venue objection and the motion to transfer was scheduled for March 11, 1991. In the meantime, at a docket call on September 17, 1990, the case was set for trial by jury on April 9, 1991. On March 11, 1991, following argument of counsel, the trial court overruled the Administrator's venue objection and denied the motion to transfer. . . The motor vehicle collision giving rise to the action in the present case also gave rise to a wrongful death action brought by the Administrator for Hudson's death. The wrongful death action was filed in Henrico County (the Henrico case). In the Henrico case, the Administrator alleged that Hudson's death was proximately caused by Faison's negligent operation of a motor vehicle. Following a jury trial on March 19 and 20, 1991, a verdict was returned in favor of the Administrator in the amount of $ 410,000. By order entered March 25, 1991, the Circuit Court of Henrico County entered judgment on the verdict. We awarded Faison an appeal in the Henrico case and decide today that the judgment should be reversed and the case remanded to the Circuit Court of Henrico County. See Faison v. Hudson, 243 Va. 397, 417 S.E.2d 305 (1992). We first consider whether, in the present case, the trial court erred in overruling the Administrator's venue objection and motion to transfer. The record establishes that the motor vehicle accident occurred in Henrico County, and the Administrator resides in the county. At the time of his death, the decedent resided and regularly conducted his business affairs, as an employee of the Henrico County school system, in the county. During oral argument, the following exchange took place between the trial court and Faison's counsel: THE COURT: There is no venue [in the City of Richmond], is that right? [FAISON'S COUNSEL]: Judge, I think that there is. The decedent was Chairman of the United Way Campaign for his Henrico County area, from my understanding, and their offices were located at Fitzhugh Avenue at that time, which would be located in the City of Richmond. This was Faison's sole basis for claiming that the City of Richmond was a proper venue. In deciding the venue issue, we focus upon Code §§ 8.01-260, -262, -264, and - 265. Code § 8.01-260, in pertinent part, provides that, except for certain actions not

- 261 - germane to the present case, "and subject to the provisions of §§ 8.01-264 and 8.01-265, the venue for any action shall be deemed proper only if laid in accordance with the provisions of [§] 8.01-262." Code § 8.01-262, in pertinent part, read [at the time of this decision] as follows: In any actions to which this chapter applies except those actions enumerated in Category A where preferred venue is specified, one or more of the following counties or cities shall be permissible forums, such forums being sometimes referred to as "Category B" in this title: 1. Wherein the defendant resides or has his principal place of employment. . . . 3. Wherein the defendant regularly conducts affairs or business activity. . . . 4. Wherein the cause of action, or any part thereof, arose; . . .

Code § 8.01-264(A), in pertinent part, states the following: Venue laid in forums other than those designated by this chapter shall be subject to objection, but no action shall be dismissed solely on the basis of venue if there be a forum in the Commonwealth where venue is proper. In actions where venue is subject to objection, the action may nevertheless be tried where it is commenced, and the venue irregularity shall be deemed to have been waived unless the defendant objects to venue by motion filed, as to actions in circuit courts, within twenty-one days after service of process commencing the action, or within the period of any extension of time for filing responsive pleadings fixed by order of the court. . . . Such motion shall set forth where the defendant believes venue to be proper . . . and shall be promptly heard by the court upon reasonable notice by any party. . . . If such motion is sustained, the court shall order the venue transferred to a proper forum under the appropriate provisions of §§ 8.01-195.4, 8.01-260, 8.01-261 and 8.01-262. . . . (Emphasis added.) At the time of the trial court's ruling, Code § 8.01-265, in pertinent part, provided as follows: In addition to the provisions of § 8.01-264 and notwithstanding the provisions of §§ 8.01-195.4, 8.01-260, 8.01-261 and 8.01-262, the court wherein an action is commenced may, upon motion by any defendant and for good cause shown, transfer the action to any fair and convenient forum having jurisdiction within the Commonwealth, or the court, on motion of a plaintiff and for good cause shown, may retain the action for trial. . . . Good cause shall be deemed to include, but not to be limited to, the agreement of the parties or the avoidance of substantial inconvenience to the parties or the witnesses. (Emphasis added.) When Code § 8.01-262 is read in conjunction with Code § 8.01-260, the City of Richmond clearly is not a proper venue for trial of the present case. Consequently, had the transfer motion been presented to the court promptly, the provisions of Code §§ 8.01-260 and -262 would have required a transfer of the case to Henrico County.

- 262 - Code § 8.01-264(A), however, states that a venue objection and transfer motion "shall be promptly heard by the court." The Administrator, being the moving party, had the burden of promptly bringing the matter to the trial court's attention, and she failed to do this. Indeed, she delayed bringing the matter to the court for approximately six months after the motion was filed. The motion was not heard until approximately one month before the scheduled trial. The trial court recognized that it must decide whether it could retain the case "when there is no venue [in the City of Richmond]." Relying upon Code § 8.01-265, the trial court determined that "there is good cause . . . to retain this case, given the trial date that is coming up in a little more than a month." The trial court also opined that the Henrico case, "between the same parties [and] involving the same accident," might resolve the issues in the present case. Whether to transfer or retain the case was a matter resting within the discretion of the trial court. Norfolk and Western Rwy. Co. v. Williams, 239 Va. 390, 393, 389 S.E.2d 714, 716 (1990). Under the circumstances presented, we think that good cause existed for retaining the case, and therefore, the trial court did not abuse its discretion in so ruling. . . .

- 263 - G. Forum Non Conveniens.

In Caldwell v. Seaboard System RR., 238 Va. 148, 380 S.E.2d 910 (1989) the Virginia Supreme Court found the Commonwealth's forum non conveniens statute constitutional. That challenge focused on whether there was a rational basis for the discrimination in § 8.01-265 between causes of action arising in Virginia and those arising outside the Commonwealth. The Court found no constitutional defect in the resulting rule that actions may be transferred within Virginia under forum non conveniens doctrine but not dismissed in favor of an arguably more convenient forum in another state, or abroad. The Legislature has set up section of the Code to permit dismissals in favor of a more convenient forum outside the Commonwealth, under certain conditions. The Court gave extended treatment to the basic operation of the forum non conveniens doctrine within Virginia in the following case, which is unaffected by the expansion of the doctrine in the current code, and indeed may provide a guide to interpreting the Code.

NORFOLK AND WESTERN RAILWAY COMPANY v. WILLIAMS 239 Va. 390, 389 S.E.2d 714 (1990)

JUSTICE LACY delivered the opinion of the Court. Nicholas C. Williams was employed by Norfolk and Western Railroad (N&W) as a clerk in the Caller's Office in Roanoke, Virginia. On April 7, 1984, the chair in which Williams was working fell backwards. Subsequently Williams filed an action in the Circuit Court of the City of Portsmouth against N&W under the Federal Employers' Liability Act (FELA), 45 U.S.C. §§ 51-60 (1982), for injuries allegedly resulting from his fall from the chair. N&W moved to transfer the case to the Circuit Court of the City of Roanoke. That motion was denied. After a three-day trial, the jury returned a verdict in favor of Williams for $ 713,000. N&W moved to set aside the verdict and renewed its motion to transfer the case. The trial court denied N&W's motions and entered judgment on the verdict on January 12, 1989. We granted N&W an appeal. Although N&W assigned a number of errors, we need address but one: whether the trial court erred in refusing to grant N&W's motion to transfer the case under § 8.01- 265, the forum non conveniens statute. N&W's motion for transfer of venue was addressed to the sound discretion of the trial judge, and his action in denying the motion cannot be reversed unless the record affirmatively reflects an abuse of discretion. Shifflett v. Commonwealth, 221 Va. 760, 771-72, 274 S.E.2d 305, 312 (1981). Here, after review of the record, statutes, and principles pertinent to the doctrine of forum non conveniens, we conclude that the refusal of the trial court to transfer this cause to the Circuit Court of the City of Roanoke constituted an abuse of discretion. Venue statutes generally afford a plaintiff a choice of appropriate forums. The choice insures that the plaintiff will be able to prosecute his cause, and usually allows

- 264 - him to choose a place which he considers most suitable. However, the common law and, subsequently, legislative bodies recognized that "the open door may admit those who seek not simply justice but perhaps justice blended with some harassment. A plaintiff sometimes is under temptation to resort to a strategy of forcing the trial at a most inconvenient place for an adversary, even at some inconvenience to himself". Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 507 (1947). To guard against abuse of the latitude afforded by the venue statutes, judges were vested with the discretion to change the location of the trial in favor of a location more convenient to the parties and witnesses, one free of any taint of prejudice, or one which would better serve the ends of justice. The Virginia statutes likewise offer a plaintiff the choice of forum in which to bring his action. Additionally, the General Assembly has incorporated the doctrine of forum non conveniens into the Virginia venue statutes by stating specifically that those statutes are intended to allow actions to be tried in courts which are "convenient to the parties and witnesses." Code § 8.01-257. A case properly filed in one court may be transferred to another "fair and convenient forum" on a showing of good cause. Code § 8.01-264. The transfer decision is within the court's discretion, and, as with other discretionary acts, there is no clear formula which can be mechanically applied. Circumstances ordinarily considered in motions to transfer on the basis of forum non conveniens include: relative ease of access to sources of proof; availability of compulsory process for attendance of unwilling, and the cost of obtaining attendance of willing witnesses; possibility of view of premises, if view would be appropriate to the action; and all other practical problems that make trial of a case easy, expeditious and inexpensive. Gulf, 330 U.S. at 508. The General Assembly has provided additional guidance by defining "good cause" as including but not limited to "the avoidance of substantial inconvenience to the parties or the witnesses." Code § 8.01-265. Careful consideration of the facts, a balancing of the competing interests, and an analysis of the appropriate principles must be undertaken in each case. The forum chosen as a result of this process should be one which insures the ability of the plaintiff to prosecute his cause free from any suggestion of abuse of the venue provisions. The circumstances of this case, as reflected in Williams' motion for judgment, showed that he was an employee of N&W injured "in the regular course of his duties at the 24th Street Caller's Office, in Roanoke, Virginia." Williams alleged that N&W "regularly and systematically conducts affairs or business activities within the City of Portsmouth, Virginia." The pleading also indicated that the defendant N&W could be served through its registered agent located in Roanoke. In making its decision, the court also considered the objection to venue and motion to transfer in which N&W argued that Roanoke was the preferred forum. N&W pointed out that the accident occurred in Roanoke and "did not arise out of any of the affairs or business activities of the defendant within the City of Portsmouth." Furthermore, N&W asserts that "no connection exists between said accident or cause of action and any business of Norfolk and Western Railway Company within the jurisdiction" of the Portsmouth Circuit Court. Stating that trial of the cause in Portsmouth would not be convenient to either the parties or the witnesses, N&W informed the court that all of the

- 265 - known potential liability witnesses were from Roanoke and all of the known potential medical witnesses "reside or practice in the Roanoke area, except a physician selected by plaintiff's counsel, who practices in Richmond, Virginia." A hearing on the motion to transfer was held but was not transcribed. While we do not know precisely what arguments were made to the court, on brief Williams acknowledges that "as [the record] stood then," N&W presented argument regarding the number of witnesses who would have to travel from Roanoke to Portsmouth for the trial. Based on these proceedings, the trial court entered an order denying N&W's motion to transfer, holding that N&W failed to show "good cause or substantial inconvenience that would justify the exercise of discretion to transfer this proceeding from the forum selected by the plaintiff." Williams sets out a number of considerations justifying the trial court's action as a proper exercise of discretion. First and foremost, he asserts that the plaintiff's choice of forum is entitled to great deference. Citing Boyd v. Grand Trunk W. R. Co., 338 U.S. 263, 265 (1949), he asserts that the choice of venue in a FELA action is a "substantial right" and proposes that the presumption in favor of the plaintiff's choice of forums in a FELA action is stronger than in other actions. While the presumption of correctness attaches to a plaintiff's choice of forum, it is not absolute. Piper Aircraft v. Reyno, 454 U.S. 235 (1981). Indeed, the presumption cannot be enhanced simply because the action arises under the FELA. We are bound to apply the same principles to venue issues in a FELA case as we apply to venue issues in any other tort case. Southern R. Co. v. Mayfield, 340 U.S. 1 (1950). Next, explaining that N&W is a wholly-owned subsidiary of Norfolk Southern Corporation, a holding company with its corporate headquarters in Norfolk, Williams asserts that his choice of forum should receive special deference because it is N&W's principal place of business. In support of this premise, Williams cites cases in which transfer away from a defendant's principal place of business was refused. Even assuming that the principal place of business of N&W's parent company becomes N&W's principal place of business, the fact is that Williams filed this action in the Third Judicial Circuit, Portsmouth, not the Fourth Judicial Circuit, Norfolk, which he maintains is N&W's principal place of business. Thus, the rationale of the cases he cites is not applicable under the circumstances of this case. Clearly an important indicator of good cause supporting transfer is substantial inconvenience to parties or witnesses. Williams maintains that because he willingly undertook to pursue this litigation in Portsmouth, his inconvenience cannot be used to argue against his choice of forum. Code §§ 8.01-257 and -265 speak in terms of inconvenience not only of parties but also of the witnesses. By holding a trial in

- 266 - Portsmouth, the witnesses faced the inconvenience of being away from families, homes, and jobs while traveling to Portsmouth to testify, regardless of who made the arrangements and paid for the travel expenses. Not one potential witness was from Portsmouth and would be spared this imposition. The alternative was the presentation of deposition testimony, a less desirable procedure which deprives the trial judge and jury of the ability to evaluate the witnesses in person. Finally, Williams argues that "[w]holesale appellate review and relitigation of the circuit court's exercise of discretion [in denying a motion to transfer] . . . would transform these motions into an engine for increasing the delay, inconvenience, and cost of litigation." Appellate review of every case inevitably increases delay, inconvenience, and cost of litigation. However, the General Assembly determined that the importance of an appropriate, convenient forum to judicial administration was significant enough to specifically provide for appellate review of this issue. Code § 8.01-267. This Court has likewise ordered a new trial when the principles of forum non conveniens and the venue statutes have been improperly applied. See Booth v. Broudy, 235 Va. 457, 369 S.E.2d 165 (1988). When the trial court was required to exercise its discretion, to weigh the interests, and to rule on the motion for transfer, it had basically only two factors before it supporting retention of the cause in Portsmouth. First, N&W's railroad tracks run through Portsmouth, requiring N&W to engage in business in that city, thereby making Portsmouth a proper choice of venue. Second, and more importantly, Portsmouth was the plaintiff's original choice of forum, and his selection should not be lightly defeated. But the weight afforded that choice is diminished when, as here, the action has at best only a technical, formal connection with the original court chosen, Portsmouth. While Portsmouth was a proper forum, it had no practical nexus whatsoever with the instant action. In contrast, this action had a strong nexus with Roanoke. The injury arose in Roanoke. N&W's registered agent and principal headquarters were located in Roanoke. All of the known potential witnesses, with the exception of one, were residents of Roanoke. The plaintiff was employed by N&W at an office in Roanoke. The trial court was presented with sufficient information to show good cause to transfer, including substantial inconvenience to the parties and witnesses, as well as indications of a forum originally selected for "not simply justice, but perhaps justice blended with some harassment." Gulf, 330 U.S. at 507. Reviewing the applicable principles and record available for consideration by the trial court, we conclude that the trial court abused its discretion in denying N&W's motion to transfer the action from the Circuit Court of the City of Portsmouth to the Circuit Court of the City of Roanoke.15 For the reasons stated above, we will reverse the decision of the trial court and remand the case for entry of an order consistent with this opinion.

15 The trial court may have misunderstood the conditions under which forum non conveniens is to be applied. In explaining its denial of the motion to transfer re-urged after the verdict, the court in its opinion letter stated, "While the Court is respectful of the concept of forum non conveniens, it should not be used to defeat plaintiff's choice of forum where `the same is proper." Application of the doctrine of forum non conveniens presumes that the plaintiff's original choice of forum is proper. If the choice is not proper, the action must be transferred. It precisely the doctrine of forum non conveniens which authorizes a transfer from one appropriate or proper forum to another appropriate forum.

- 267 - Note on "Nexus" and the Transfer Doctrine

Nexus Nixed? In Virginia Electric and Power Company v. Dungee, 258 Va. 235, 520 S.E.2d 164 (1999), the Supreme Court seems to have limited one aspect of Williams. A young person injured in Richmond sued in Charles City County, predicating venue on the fact that Virginia Power did business in the latter venue. The defendant contended that although Charles City County is a permissible venue under Code § 8.01-262(3) because it conducts business there, application of the principles set out in Norfolk & Western Railway Co. v. Williams, 239 Va. 390, 389 S.E.2d 714 (1990), required that the action be transferred because Charles City County has no practical nexus with the litigation. The Supreme Court disagreed. It held, that for negligence cases, among others, the Code of Virginia provides a plaintiff with a choice of forums in which an action can be brought. Code § 8.01-262. However, Code § 8.01-265, the so- called forum non-conveniens statute, allows the transfer of any action, even if it was originally filed in a proper venue, to "any fair and convenient forum" in the Commonwealth upon a motion by the defendant and "for good cause shown." Code § 8.01-265. "Good cause" under the statute includes, but is not limited to, "the avoidance of substantial inconvenience to the parties or the witnesses." Whether to grant such a motion is within the discretion of the trial court, and the trial court's denial of the motion will not be reversed absent an abuse of that discretion. To secure a change in venue, Virginia Power had the burden of showing that there was good cause to transfer the case from Charles City County to the City of Richmond. In ruling on Virginia Power's motion, the trial court considered the impact on the witnesses and parties of holding the trial in Charles City County, as compared with holding it in Richmond. It concluded that traveling thirty miles to Charles City County from Richmond imposed minimal cost and inconvenience on those parties and witnesses who lived in Richmond, and that holding the trial in Charles City County would not impose any material inconvenience on witnesses coming from other areas of the country because the Richmond airport is located midway between Richmond and Charles City County. The court also concluded that there was no evidence that overnight stays in Charles City County would be required for those witnesses who lived in Richmond. Based on these factors, the trial court concluded that traveling thirty miles imposed minimal inconvenience and that there was no showing of substantial inconvenience to the parties or witnesses. Virginia Power argued on appeal that the test for good cause is not exclusively substantial inconvenience, contending that Williams established that a trial court abuses its discretion under Va. Code § 8.01-265 if it declines to transfer venue from a forum with no practical nexus to the cause of action to a more convenient forum with a strong nexus. The Supreme Court responded that § 8.01-265 does not limit the definition of "good cause" to the avoidance of substantial inconvenience to the parties or the witnesses; however, it disagreed with the characterization of the holding in Williams. However, in the Dungee decision the Court held that the degree of the "nexus" does not alone provide the good cause required for transfer under the statute. In Dungee the Court explained that this prior holding does not support the construction that transfer is required based solely on the lack of a practical nexus of the venue with the litigation. Finding that the trial court did not abuse its discretion, the Supreme Court affirmed the trial court's denial of Virginia Power's motion to transfer venue.

- 268 - H. Forum Selection Agreements

PAUL BUSINESS SYSTEMS v. CANON U.S.A., INC. 240 Va. 337, 397 S.E.2d 804 (1990)

JUSTICE COMPTON delivered the opinion of the Court. In this tort action arising from a business relationship, we determine the validity and enforceability of contractual provisions, so-called "forum selection clauses," which limit the place or court where potential causes of action may be brought between the parties. We have not addressed this specific issue before, although the question has been the subject of extensive litigation elsewhere. In March 1989, appellant Paul Business Systems, Inc., filed a multi-count motion for judgment against Dyna-Fax, Ltd., seeking compensatory and punitive damages. In August 1989, the plaintiff amended its motion for judgment adding as defendants three Dyna-Fax employees, appellee Canon U.S.A., Inc., and two Canon employees. The amended motion included counts for defamation, intentional interference with contractual and economic relations, and conspiracy to injure the plaintiff in its reputation and business. In the amended motion, the plaintiff alleged it is a reputable dealer in business machines and other office products with a business territory covering the Peninsula area of the state. It asserted that Canon copiers is one of the major business lines it carries for which it is an authorized dealer offering comprehensive sales and service. The plaintiff alleged that it is in direct competition with Dyna-Fax as to sales territory, potential customers, and products and services offered. Plaintiff asserted that the ability of a copy machine marketer to provide service after the sale is "crucial" to making such sales. The plaintiff further alleged that the corporate defendants, acting through the individual defendants, made certain false representations to plaintiff's customers. According to the allegations, defendants stated that the customers should refrain from "dealing" with the plaintiff "because it was about to go out of business;" that plaintiff "would not provide an ongoing service department;" that plaintiff "was about to be

- 269 - 'dropped' by Canon as one of its dealers;" and that plaintiff's "business was about to be taken over" by Dyna-Fax. Asserting that "similar statements have been made repeatedly" by defendants, plaintiff alleged that the foregoing utterances were made at an office products exposition in Virginia Beach on March 30, 1988. Further, plaintiff asserted that on August 22, 1988, as well as "on numerous other occasions, both before and after that date," the defendants "combined, associated and conspired willfully and maliciously to defame and injure Plaintiff." The plaintiff asserted that defendants informed the purchasing agent for "the Newport News Shipyard (Division of Tenneco, Inc.)" on the August date that "the shipyard should not have the Plaintiff on its bidders list because the Plaintiff was in financial trouble, was about to lose its Canon distributorship, and that it would be unable to provide service of the product line." Under the conspiracy count, the plaintiff alleged that the conduct of defendants constituted a violation of Code § 18.2-499 ( to combine to injure others in their reputation, trade, business, or profession). Additionally, the plaintiff claimed to be entitled to treble damages as provided in Code § 18.2-500 (civil relief afforded those injured by a violation of § 18.2-499). Responding to the plaintiff's allegations, Canon filed a motion to dismiss. The two Canon employees named as defendants have not been served with process and have not appeared in this action. Urging dismissal, Canon contended that the action was brought in breach of plaintiff's contractual agreement "to litigate all disputes with Canon only in New York and, therefore, this Court lacks jurisdiction." Upon consideration of the argument of counsel, the trial court ruled that the forum selection clauses in issue were valid, granted Canon's motion, and dismissed the Canon defendants from the action, but "without prejudice to the plaintiff's right to institute suit pursuant to the terms of the ." We awarded the plaintiff an appeal from the November 1989 dismissal order. The action remains pending in the trial court against the Dyna-Fax defendants, who have not appeared on appeal. The clauses in question are contained in six dealer agreements between the plaintiff and Canon executed between 1983 and 1989. Pursuant to the agreements, the plaintiff was appointed as a non-exclusive authorized retail dealer of various models of Canon

- 270 - copiers and electronic office typewriters. The agreements were executed by the respective parties on the on the following dates:

Plaintiff Canon 1. March 18, 1983 March 30, 1983 Amended March 14, 1985 May 1, 1985 2. December 20, 1985 April 14, 1986 3. Signature undated August 31, 1988 4. February 22, 1989 April 17, 1989 5. February 22, 1989 April 18, 1989 6. February 22, 1989 June 20, 1989

It should be noted that agreements 3, 4, 5, and 6 were all formed after the alleged causes of action arose on March 30, 1988 and August 22, 1988. Agreements 1, 3, 4, and 6 contained the following forum selection clause. We have italicized the pertinent language. "This agreement shall be governed by and construed in accordance with the laws of the State of New York, and Dealer consents to the jurisdiction and venue of any local, state or federal court located within the State of New York upon service of process made in accordance with the statutes of New York and the United States, and further agrees that any and all causes of action hereunder by and between the parties hereto shall only have jurisdiction and venue in the local, state or federal courts in the State of New York. Any suit between the parties relating to this Agreement, other than for payment of the purchase price of the Products, shall be commenced, if at all, within one (1) year of the date that it accrues." Agreements 2 and 5 contained a forum selection clause with language slightly different from the other four. We have italicized the different language. "This Agreement shall be governed by and construed in accordance with the laws of the State of New York, and Dealer consents to the jurisdiction and venue of any local, state or federal court located within the State of New York upon service of process made in accordance with the statutes of New York and the United States, and further agrees that any and all causes of action whether or not arising under this Agreement by and between the parties hereto shall only be brought in a local, state or federal court situated within the State of New York. Any suit between the parties relating to this Agreement, other than for payment of the purchase price of the Products, shall be commenced, if at all, within one (1) year of the date it accrues." In the past, forum selection clauses were viewed with disfavor in most American courts. These clauses, purporting to confer jurisdiction on specifically named courts for adjudication of future controversies, were viewed as unenforceable as "contrary to public policy" and as an effort to "oust the jurisdiction" of the forum court. The Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 9 (1972); annot. 31 A.L.R.4th 404, 409. "Private

- 271 - individuals have no power to alter the rules of judicial jurisdiction." Restatement (Second) of Conflict of Laws § 80 comment a (1971 & Supp. 1989). In recent years, however, numerous courts, state and federal, have adopted what has been called a "more modern view," 31 A.L.R.4th at 409, and a "more hospitable attitude toward forum-selection clauses." The Bremen, 407 U.S. at 10. According to the modern view, which we now embrace, contractual provisions limiting the place or court where potential actions between the parties may be brought are prima facie valid and should be enforced, unless the party challenging enforcement establishes that such provisions are unfair or unreasonable, or are affected by fraud or unequal bargaining power. See id., 407 U.S. at 10, 12; Restatement (Second) of Conflict of Laws § 80 (Supp. 1989); 31 A.L.R.4th at 415. The rationale most often used to support application of the modern rule is that it comports with traditional concepts of freedom of contract and recognizes the present nationwide and worldwide scope of business relations which generate potential multi-jurisdictional litigation. The Bremen, 407 U.S. at 11. Our preference for the foregoing view is consistent with the rule in Virginia, established in a similar context, that where parties to a contract have expressly declared that the agreement shall be construed as made with reference to the law of a particular jurisdiction, we will recognize such agreement and enforce it, applying the law of the stipulated jurisdiction. Union Central Life Ins. Co. v. Pollard, 94 Va. 146, 151-52, 26 S.E. 421, 422 (1896). See generally Docksider, Ltd. v. Sea Technology, Ltd., 875 F.2d 762 (9th Cir. 1989) (applying modern rule and enforcing contract provision vesting jurisdiction and venue exclusively in Gloucester County, Virginia); Bryant Elec. Co., Inc. v. City of Fredericksburg, 762 F.2d 1192, 1196-97 (4th Cir. 1985) (applying Virginia law, determining that Virginia would follow the modern view, and enforcing a forum selection clause). In the present case, the plaintiff recognizes that contractual forum selection clauses normally should be given effect. And, the plaintiff does not contend that the clauses at issue in the six agreements are the products of fraud or unequal bargaining power. The plaintiff assigns three reasons, however, why the clauses should not be enforced. First, the plaintiff says that enforcement under these facts would be "unreasonable and unjust as a matter of law." Elaborating, the plaintiff argues that the "case has nothing to do with any contract existing between plaintiff and defendant, Canon." It argues that the case "would exist if there were no contract" because the charge is that defendants conspired to damage and destroy plaintiff's business in violation of Code §§ 18.2-499 and -500. Additionally, plaintiff asserts that no equivalent to § 18.2-499 exists in New York "and the acts allegedly violating it were committed in Virginia and within a 30-mile radius of Hampton." Also, plaintiff says that "Dyna-Fax, the other corporate defendant, is almost certainly not subject to the jurisdiction of the New York courts for purposes of this suit." Finally, plaintiff asserts that all of the non-party witnesses are Virginians, not subject to subpoena in New York. Second, plaintiff contends that defendants' conduct generating "this action for intentional torts and conspiracy could not have been foreseen by Paul at the time of contracting." Thus, plaintiff says, "the obvious and serious inconvenience of New York as the venue for this trial requires that the forum clause be not enforced."

- 272 - Third, plaintiff argues that enforcement of the forum selection provisions "would violate a strong public policy of Virginia." Rejecting these contentions, we hold that the plaintiff has failed to establish that enforcement of the forum selection provisions would be unfair or unreasonable. An examination of the allegations of the amended motion for judgment demonstrates that this action flows directly from the several dealership agreements. Of course, the business relationship finds its basis in the agreements. Moreover, the plaintiff alleges that defendants falsely stated to customers that plaintiff was on the verge of being "dropped" by Canon as one of its dealers. Implicit in this charge is that termination of the plaintiff's dealership, as established by the agreements, was imminent. Additionally, the plaintiff charges that the shipyard's purchasing agent was informed that plaintiff was about to lose its dealership. Again, this makes a claim for wrongs arising straight from the agreements between the parties. Therefore, we find that these tort claims are covered by the "hereunder" language of the four agreements and certainly by the "whether or not arising" language of the other two. Because the causes of action asserted arose "under" the agreements, the plaintiff will not be heard to claim unfairness and unreasonableness when at least three, and probably four, of the agreements were executed by the plaintiff's president after the causes of action arose. There is no claim that plaintiff's chief officer was inexperienced and, as stated, there is no claim of fraud or overreaching on the part of Canon's representative. The alleged inconvenience of litigation in New York, the anticipated difficulty in joining Dyna-Fax in a New York suit, and the likelihood of this action for intentional conduct stemming from the agreements, all should have been foreseen by the plaintiff which, with full knowledge of the existence of these causes of action, voluntarily entered into the agreements, at least one of which provided for a New York forum "whether or not" the causes of action arose under the agreement. Finally, we do not agree that enforcement of the forum provisions would violate "a strong public policy of Virginia." The plaintiff has pointed to no Virginia case or statute which suggests that Virginia policy rejects forum selection clauses, and we have found none. Indeed, today we have expressly sustained the validity of such provisions, approved their use, and enforced them. For these reasons, the judgment of the trial court will be Affirmed. JUSTICE RUSSELL, with whom JUSTICE WHITING and JUSTICE LACY, join, concurring: I concur in the result, but do not subscribe to all the reasoning contained in the majority opinion. I agree that traditional concepts of freedom of contract, in the absence of demonstrable unfairness, fraud, or unequal bargaining power, support the enforcement of forum selection clauses. Because the record here is devoid of evidence of fraud, unfairness, or overreaching, I would enforce the agreements as written. That holding, in my view, should end the case. In agreements 2 and 5, the contracting parties agreed to litigate, exclusively in New York's state or federal courts, any and all causes of action that might arise between themselves "whether or not arising under this Agreement" (emphasis added). Therefore, it matters not whether Paul's claims against Canon arise under one or more of the six agreements. If the forum selection clauses are operative according to their

- 273 - plain language, as all members of the Court agree that they are, then agreements 2 and 5 alone suffice to accomplish the result for which Canon contends. Unfortunately, the majority opinion reaches that result by a labored effort to characterize the plaintiff's claims of defamation, civil and criminal conspiracy, and tortious interference with contractual relations as causes of action arising under the parties' contracts. I think that reasoning to be untenable. It can hardly be argued that the parties, when entering into their agreements, contemplated that one of them would defame the business reputation of the other, telling customers that the injured party was about to go out of business, was approaching insolvency, or would not stand behind the products it sold. It is particularly unthinkable that Canon, having contractually bound itself to the plaintiff as a dealer, would tell customers that it intended to breach its own agreement by "dropping" the plaintiff. Each contracting party is entitled to assume that the other intends to perform the contract in good faith. See 11 Williston on Contracts § 1300 (3rd ed. 1968). A cause of action arising under a contract is, by definition, a cause ex contractu: In both the civil and the common law, rights and causes of action are divided into two classes, --those arising ex contractu (from a contract), and those arising ex delicto (from a delict or tort). Where cause of action arises from breech (sic) of a promise set forth in contract, the action is "ex contractu", but where it arises from a breech (sic) of duty growing out of contract, it is "ex delicto". Black's Law Dictionary 508 (5th ed. 1979) (citations omitted). Indeed, Canon had a duty not to defame or slander Paul, but that duty was imposed by the law of torts. It did not grow out of the promises in the contracts. It would have existed if the parties had never contracted at all. Under agreements 1, 3, 4, and 6, the parties only contracted to litigate ex contractu causes of action in New York. Tortious and criminal conduct gives rise to causes of action ex delicto, which arise from wrongs entirely outside the contracts. The conduct charged by the plaintiff against Canon would, if proved, constitute a series of torts quite independent of the contracts between the parties. In Virginia, it also would constitute criminal conduct. It strains reason to hold that such conduct "arose under" the contracts. I wish to disassociate myself from that portion of the majority opinion which so holds because of my concern for the unfortunate effect of such a holding upon future cases. The bench and bar should be secure in the knowledge that it is possible to draft forum selection clauses as broad as those in agreements 2 and 5, which embrace all causes of action, but that it is also possible to draft such clauses more narrowly, embracing only causes of action arising under the contract itself, and that the courts will respect the distinction.

- 274 - Notes on Specific Venue Issues

Divorce. Previously, a long line of authority in Virginia applied statutes making use of an appropriate venue jurisdictional in divorce cases. See, e.g., Netzer v. Reynolds, 231 Va. 444, 345 S.E.2d. 291 (1986). By statutory amendment in 1989, venue in divorce was made a Category A (preferred) consideration, and hence waivable. Under the statute, § 8.01-261(19), venue in divorce cases where the defendant is a Virginia resident may be laid at plaintiff's option in either the city or county where the parties last cohabited, or where the defendant resides. If the defendant is a non-resident of Virginia, plaintiff may also elect to lay venue in the city or county where plaintiff resides. Review of Administrative Decisions. The provisions for venue when a person is in dispute with the Commonwealth involving action by an administrative agency may be paraphrased as follows in the words of John Donaldson, a leading exponent of Virginia procedure: "The Commonwealth must come to the citizen", meaning that if the citizen is aggrieved and wishes to file suit, venue will lie where the plaintiff resides. If the Commonwealth is the aggrieved party and wishes to sue, the citizen may object and cause the action to be transferred to the place of the citizen's residence if it is filed anywhere else. Costs, Sanctions, Ethics. Virginia Code § 8.01-266 provides that costs will be charged against plaintiff who brings an action in an improper venue. The components of these costs appear to exceed simple "court costs" (see Code title 14.1) and include concretely demonstrated items resulting from inconvenience or delay in the forum selected. The court has discretion to award attorney's fees. Conversely, if a defendant makes a motion against venue and it is denied, and it is expressly found to be frivolous, motion costs may be assessed against the moving defendant. Of course, knowing selection of an improper venue violates provisions of the Code of Professional Responsibility as well. Moreover, the sanction provisions of § 8.01-271.1 will presumably apply to permit recoupment of costs incurred when counsel fails to select a forum with a reasonable basis under the facts and the law. There are numerous reported decisions under Fed.R.Civ.P. 11 involving jurisdictional and venue facts which counsel failed to explore adequately before filing suit (such as where a party's principal place of business really is). Can development of such a body of authority in Virginia be far behind? Construction Contracts. The Legislature in 1991 enacted a special forum selection provision for actions involving contractors and subcontractors, placed in Code § 8.01-262.1. It provided that, notwithstanding any "recitals" in the contract to the contrary, a cause of action involving a construction contract could be brought in the locale where the work is performed. In 1997 the General Assembly expanded venue in construction contract cases to include any venue permitted in the normal venue statutes, and the place where the project is located. At the same time, however, it deleted the language which had precluded contract terms from selecting a venue. The apparent result of this action is that venue selection terms in an agreement may override the venue statutes, and will apply whether or not the venue selected is one allowed by the Code. The same section also provides that arbitration clauses in such contracts are invalid if they call for proceedings outside the Commonwealth of Virginia. Then in 1999 the General Assembly amended the statute governing construction contracts again,

- 275 - this time to provide that "any provision in a contract mandating that such action be brought in a location outside the Commonwealth shall be unenforceable." The result is that forum selection clauses are virtually abrogated by the Code in this category of litigation. Where a party objects, therefore, a permissive venue within Virginia must be located. Similarly, arbitrations of such contracts must be held in Virginia under this code provision. Associations and Partnerships. The Code does not expressly state its applicability to partnerships and associations. A general approach for unincorporated associations would be to focus on the existence of an office in the Commonwealth (arguing from § 8.01-262(2)) or the residence here of at least one co-defendant individual (such as an officer) making subsections (1) or (3) of -262 plausible. Foreign associations (such as some out-of-state labor unions) may be deemed to appoint registered agents or the Secretary of the Commonwealth for some purposes. Partners who reside in Virginia may also be sued with venue predicated on the residence or work location of any one partner. Injunctions. Older case law recites that judge may issue an injunction affecting person or actions anywhere in the Commonwealth. However, under Code § 8.01- 261(15) venue lies only where the act "to be done, or being done . . . or the proceeding [to be enjoined] is pending." At a minimum this means all subsequent proceedings in the cause, including applications to dissolve, modify or make the injunction permanent, must take place in the court where the injunction actually applies. The Court has not had occasion to construe this provision in recent decades, and thus whether it remains open to bring the proceeding elsewhere in the first instance is not clear. Federal Interstate Commerce Cases. Under the venue provisions of the Carmack Amendment, venue in claims brought in a state court relating to interstate shipments of goods must be laid in a state through which the delivering carrier operates a route and a civil action against a carrier causing loss or damage to a cargo must be brought in the judicial district where loss or damage is alleged to have occurred. A complaint asserting a failure to deliver vehicles to Danville set forth a breach which occurred in Danville, hence venue in Danville was consistent with the mandate of the federal statute. Hairston Motor Company v. Newsome, 253 Va. 129, 480 S.E.2d 741 (1997).

- 276 -

Hypotheticals

1. T, a tourist visiting Virginia Beach, was stung by a Portuguese man-of-war jellyfish while swimming. He was hospitalized for four days but did not pay the bill when released, because he thought it was covered by insurance. The hospital files suit in the circuit court for the City of Norfolk. T is a Lynchburg resident who is employed by the Bedford county schools. T is served personally in Bedford at the school where he works. His attorney promptly filed an answer to the suit. Several weeks later T's counsel files a motion objecting to venue in Norfolk. Is there merit to the motion?

2. A dispute has arisen with respect to the boundary between two parcels of land in Albemarle county. A, an Albemarle resident, owns one parcel and H, a Henrico County resident, owns the other. H files suit in the circuit court of Henrico County seeking determination of the true boundary. A files a motion to dismiss the action in Henrico on the ground of improper venue. What action should the court take?

3. R is a Richmond, Virginia resident and the owner of a record store located in Charlottesville. She files suit in the circuit court for Richmond, naming H and S, two patrons who got into a fistfight at the front of her store and smashed through a plate glass window. H lives in Harrisonburg and was personally served on May 2; S lives in Staunton, Virginia and was personally served on May 3rd. On May 20 S filed his grounds of defense. On May 21st, H filed a motion to dismiss as to himself on the ground of improper venue, seeking in the alternative that the case be transferred to Harrisonburg or (alternatively) Charlottesville. S read this motion, felt that it was meritorious, and filed a similar motion on June 4th on his own behalf. How should the court rule?

4. P served two defendants in a venue that was improper as to both of them. One of the defendants didn't recognize the error and allowed more than 21 days to transpire without raising a venue problem. The second defendant, however, made a motion with respect to venue within a week after being served with process. How should the court rule on the second defendant's venue motion?

- 277 - - 278 - Chapter 6 Service of Process & Personal Jurisdiction

A. Commencing the Action -- Generally ...... 281 Overview………...... 281 Washburn v. Angle Hardware...... 282 What is Process in Virginia?...... 285 NOTES on People and Service...... 287 Key Service of Process Code Sections...... 288 Code § 8.01-275.1 When service of process is timely ...... 288 Code § 8.01-290 Plaintiffs Required to Furnish Full Name & Address...... 288 Code § 8.01-293 Who May Serve Process...... 288 Code § 8.01-295 Territorial Limits Within Which Sheriff may Serve...... 289 Code § 8.01-296. Manner of Serving Process upon Natural Persons ...... 289 Some Key Rules Governing Commencement of the Action...... 290 Rule 3:2 Commencement of Civil Actions ...... 290 Rule 3:4 Copies of Complaint...... 290 Rule 3:5 The Summons...... 291 B. Abode Service – "Nail and Mail" and Full Faith & Credit...... 292 Washington v. Anderson...... 292 NOTE on the "Mailing Requirement"...... 295 C. Serving Domestic Corporations, Partnerships, and Associations...... 295 Summary ...... 295 Katchi v. Landmark Restaurant Associates ...... 296 D. Serving Foreign Corporations...... 298 Code § 8.01-301 ...... 298 E. "Statutory Agents" of Non-Resident Motorists...... 298 F. Service by Mail – Not ! ...... 299 G. Service by Publication ...... 300 Overview of the Procedure ...... 300 Code §8.01-316...... 301 Code §8.01-317...... 302 H. Who is a "Nonresident" for Use of Publication Service ...... 303 Dennis v. Jones ...... 303 Relief from Judgments Obtained After Publication and Default...... 307 Code §8.01-322...... 307 NOTE: Constitutional Gloss on Going Beyond Mere Publication ...... 308 I. Service in Person Outside the Commonwealth ...... 309 Sketch of the Issue...... 309 Code § 8.01-320 ...... 310 J. "Presence" and "General Jurisdiction" ...... 311 Introduction to General Jurisdiction ...... 311 Witt v. Reynolds Metals Company...... 311 NOTE on Applying General Jurisdiction Concepts...... 314 K. "Waiver" of Service of Process...... 315 Code § 8.01-286.1...... 315 L. Long-Arm Statute...... 317 Summary……...... 317 Code §8.01-328.1 Long Arm Categories...... 318 Code §8.01-329 Service of process via Secretary of Commonwealth...... 319 M. Personal Jurisdiction Standards Applied in Virginia ...... 321 The Due Process Component and Minimum Contacts...... 321

- 279 - Orchard Management Co. v. Soto ...... 321 Applying Contacts and The Virginia Long Arm Statute ...... 323 John G. Kolbe, Inc. v. Chromodern Chair Co...... 323 Minimum Contacts Over the Internet ...... 326 Krantz v. Air Line Pilots Association...... 326 Claims Arising from In-State Contacts and the Long Arm Statute ...... 329 Gallop Leasing Corp. v. Nationwide Mutual Ins...... 329 NOTES On Payment Due in the Forum ...... 331 Errors in the Long-Arm Mailing Process ...... 332 N. Completion of Service, Return and Non-Standard Service ...... 333 General Principles...... 333 The "One-Year Rule" for Completing Service of Process...... 334 Gilbreath v. Brewster...... 334 Computing One-Year & Application of the "Savings" Statute ...... 337 Frey v. Jefferson Homebuilders, Inc...... 337 Code §1-210...... 338 Code §8.01-288...... 339 O. Contesting Service: The General Appearance Doctrine...... 340 Nature of this Trap...... 340 Code §8.01-277...... 340 P. Commencing Claims Against the Commonwealth and Localities ...... 342 Code § 8.01-195.3 Waiver of Sovereign Immunity...... 342 Code § 8.01-195.6 Notice of Claim [Former Version]...... 343 Halberstam v. Commonwealth of Virginia ...... 344 NOTES on Giving Notice ...... 346 Recent Statutory Changes – Mechanics and Strict Construction...... 349 Code § 8.01-195.6 Notice of claim ...... 349 Notice of Claims Against Cities and Towns – And Now Counties Too ...... 350 Code § 15.2-209. Notice to be given to counties, cities, and towns...... 350 Presentment" Requirement for Claims Against Counties, and Another Deadline...... 351 Code § 15.2-1246 Appeal from disallowance of claim...... 351 Code § 15.2-1248 Presentment required ...... 351 NOTE: What IS a claim?...... 352 Q. Immunity From Service...... 353 Code §8.01-327.2 Who are Privileged from Arrest under Civil Process...... 353 Lester v. Bennett ...... 354 NOTE on Persons Exempt from Service...... 356 R. Service of Papers after Appearance ...... 357 Code §8.01-314 Service on attorney after entry of general appearance ...... 357 Rule 1:7 Computation of Time...... 357 Rule 1:12 Service of Papers after the Initial Process...... 357 Rule 1:13 Endorsements...... 358 Service by Fax, E-Mail and Commercial Delivery Service...... 358 Service by E-mail on Consent ...... 359 S. Service Subpoenas to Non-Parties ...... 360 Bellis v. Commonwealth of Virginia ...... 360 T. Service of Certain Writs ...... 363 Further Notes on Service Related Points...... 364 Hypotheticals…………...... 365

- 280 -

Service of process is the means by which a defendant is given notice of a claim being presented to the court. In general, compliance with the service statutes and rules is necessary for assertion of personal jurisdiction, although in most situations Virginia considers process actually received to be sufficient to commence an action even if the technicalities of the rules are not met. When it comes to assertion of jurisdiction over non-residents, Virginia's "long-arm" statute is a "single act" statute, which requires a "nexus" between the conduct on which jurisdiction is based and the Commonwealth. The statute, however, has been interpreted to extend jurisdiction to the fullest extent permitted by the Due Process Clause.

A. Commencing the Action -- Generally

Overview Commencement of Action. The date on which suit is commenced marks the point at which the statute of limitations stops running. In Virginia practice a suit is commenced when it is filed rather than when it is served. In circuit court, actions are commenced by filing a complaint in the Clerk's office on which Clerk issues the other part of the "process," which is called the summons. A general district court action may be commenced by a warrant, and is deemed begun when a memorandum is filed with the clerk (or a deputy or designee authorized to issue warrants, along with the filing fee). § 16-1-86. If the general district court suit is begun by a complaint the suit is commenced when the pleading is filed, along with the filing fee. Virginia recognizes procedures falling into each of the three categories of service which have grown up in American law: 9 Actual service (e.g., on defendant personally) 9 Substituted service (e.g., on an agent of defendant) 9 Constructive (fictional) service (e.g., by order of publication)

The following is a brief survey of the service concepts generally applicable serving individual defendants under Virginia practice (treatment of corporations, associations and partnerships is found in subsequent sections of this Chapter): Service of process on natural persons. Completion of valid service is, of course, necessary for the valid exercise of jurisdiction over a defendant and entry of a valid judgment. The statute (§ 8.01-296) specifies methods which must be attempted in order. See Washburn v. Angle Hardware, below. In general, Virginia follows the rule that personal service is preferred, and must be attempted before resort may be had to any form of service with lesser assurance of providing notice actually reaching the defendant. z First serve on the defendant in person, if defendant can be found.

- 281 - z If defendant is not found, use substituted service. There are two possible methods, to be pursued in order: z Leave the process at defendant's usual place of abode with a person over 16 years of age found there who is a family member (not a temporary sojourner or guest). § 8.01-296(2)(a) . z If an appropriate person is not found, a copy of the process may be posted at the front door or at such other door as appears to be the main entrance of the usual place of abode. Generally, a temporary absence from the usual abode does not preclude effective service by posting (see Spiegelman v. Birch, 204 Va. 96, 129 S.E.2d 119 (1963)), but a person's former home is not a usual place of abode for this purpose. See generally the decisions in Washburn and Washington, below. If service is by posting, plaintiff must also give 10 days prior notice by mail before default judgment may be entered. § 8.01- 296(2)(b). Statutes authorizing substituted service must be strictly followed. z Where service cannot be effected by following the foregoing procedures plaintiff may obtain an order of publication under the provisions of §§ 8.01-316 through 8.01-320.

WASHBURN v. ANGLE HARDWARE CO. 144 Va. 508, 132 S.E. 310 (1926)

JUSTICE CHICHESTER delivered the opinion of the Court. This is a creditors' suit. . . As appears from a certified copy of the record, filed before the commissioner, the nature of the action was a notice of motion for a personal judgment against N. I. Washburn and D. M. Washburn. A copy of said notice was served on one J. E. Washburn by J. W. Kelly, deputy sheriff of J. M. Davis, sheriff of Henry county. The deputy sheriff made the following return on the original notice: "Notice: "Executed Dec. 17th, 1910, on D.M. and N. I. Washburn by delivering a true copy of the within for each of them to J. E. Washburn, he being a brother of the said N. I. Washburn, and a member of his family over the age of sixteen years and at the last home of the said N. I. Washburn. The said N. I. Washburn not being found at his usual place of abode and explaining within notice to said J. E. Washburn. >>(Signed) J. W. Kelly, D.S. >> for J. M. Davis, Sheriff." In passing upon the validity of this return, Commissioner Carter says, in part: "The case was called in the circuit court, on the above notice and return, and judgment was entered by default. "It is plainly apparent that the above return is fatally defective in so far as D. M. Washburn is concerned. . . . [And, as to N. I. Washburn] Your commissioner is of the opinion that the return is fatally defective in the following line, '* * * and at the last home of the said N. I. Washburn * * *.' The use of the word “last,” qualifying the word

- 282 - home, renders the return so defective that a judgment obtained by default is void. "Your commissioner is familiar with the two cases in Virginia deciding that the word 'home' and the word 'residence,' respectively, when used by a sheriff in his return, are synonymous with the words in the statute, 'usual place of abode.' That is undoubtedly true; at the home or the residence of a man is certainly his usual place of abode, giving to those words their accepted meaning. If the sheriff in this return had used the word 'home' unqualified by any other word, the return would be valid. Substituting the words of the statute for the word 'home' used by the sheriff in the above return, we have the following return, 'at the last usual place of abode of the said N. I. Washburn.' "Nowhere in the statute can there be found any authorization for serving a notice at the last usual place of abode. The statute doesn't contemplate any such service, but it is mandatory in its command that the sheriff must make such substituted service at the 'usual place of abode,' the then present, usual place of abode, the place of abode where the defendant resided at the time of the service, as distinguished from the place of abode where the defendant had resided. The word 'last,' as used by the sheriff in this return, indicates that the place at which the service was made has ceased to be the 'then' usual place of abode and the defendant had moved to some other place, either in the same county, in this State, or even out of the State, and that the service was made, not at the usual place of abode, but at a place that at one time had been the defendant's usual place of abode while in this county, or that section of the country. "For the same reasons your commissioner is of the opinion that the word 'last' is not surplusage that can be stricken out and not change the entire meaning of the return. "For these reasons, your commissioner is of the opinion that the judgment obtained by G. J. Penn is void." We concur in the view of the commissioner that the return was fatally defective; that the judgment was, therefore, void, and that the court erred in holding that it was a valid lien upon the real estate of N. I. Washburn. Service of process is either personal or substituted. In the instant case the notice was attempted to be served under the provision of the statute allowing substituted service, which provides that "if he" (the defendant) "be not found at his usual place of abode," (service may be had) "by delivering such copy and giving information of its purpose to his wife or any person found there, who is a member of his family, and above the age of sixteen years." At page 297, Burks' Pleading and Practice, it is said: "Where statutes have been enacted allowing substituted service, they are to be strictly construed." Citing Staunton P.G. & L. Co. v. Haden, 92 Va. 201, 23 S.E. 285. And at page 288, the learned author says: "Personal service may be on the defendant anywhere he may be found in the officer's bailiwick, but the officer is not required to search for him at but one place, and that is at his usual place of abode, and if he be not found 'at his usual place of abode,' then the officer may make the substituted service, but his return must show why he made the substituted service, and that reason must be the one given in the statute, else

- 283 - the return will be bad. The different methods of service provided by this section are not cumulative but successive. Service cannot be made upon a member of the family if the defendant be found at his place of abode, and there can be no posting if a member of the family above the age of sixteen years be found at the place of abode of the defendant; and, when one method of service is substituted for another, the return must show a right to adopt the inferior method of service by negativing ability to get the better service. The officer has no right to make the substituted service except when the statute to provides. The substituted service may be upon the defendant's wife or any person found there who is a member of his family above the age of sixteen years. But whether served on the wife or member of the family, the service can only be made at the defendant's usual place of abode and not elsewhere. (Italics ours.) 'To authorize a personal judgment on substituted service of process, the terms of the statute authorizing such service must be strictly complied with. Courts cannot dispense with any of the statutory requirements, even though satisfied that the method actually adopted for giving the defendant notice was better than that prescribed by law." In the instant case, the officer delivered a copy of the notice to a brother of the defendant over the age of sixteen years, who was described as a member of defendant's family, and explained the purport of the notice to him, but the copy was delivered to the brother, not at the usual place of abode or home, but at the last home of the defendant. Last home, or residence, or place of abode, are not synonymous with usual place of abode, etc., and, as we have seen, in making substituted service, under the statute, the copy of the notice must be left at the defendant's usual place of abode and not elsewhere. . .

- 284 -

What is Process in Virginia?

"Process" in Virginia Defined. Rule 3:5 sets out the proper form of the notice to be given of the complaint, which is called the summons and is issued by the clerk. It notifies the party being sued that unless a responsive pleading is filed in the clerk's office within twenty-one days after service of the summons, default judgment for the plaintiff may be entered. The Rule then provides that the clerk shall issue the notice and attach it to a copy of the complaint and the combined papers shall constitute the process to be served as a single paper. While one could read Rule 3:5 to say that the summons alone is the process, the Supreme Court has expressly ruled that the plain language of Rule 3:5 mandates that the process be served on the defendant has two constituent parts, both of which are required to constitute "process": a copy of the complaint and the notice issued by the clerk. It noted that the Rule underscores that these two documents, served as a single paper, constitute "process" because "[n]o judgment shall be entered against a defendant who was served with process more than one year after commencement of the action against him." Lifestar Response of Maryland, Inc. v. Vegosen, 267 Va. 720, 594 S.E.2d 589 (2004). Receiving a summons is the sine qua non to having been served with process. Indeed, under the plain language of the Rules, "process" is the summons and complaint which must be served as a single paper. Without either the noticing "summons" prepared by the clerk or the copy of the complaint, there is no notice of motion for judgment and no "process." It is the "process" which must reach the defendant to vest the court with jurisdiction. Without service of the "process," the court acquires no jurisdiction. A plaintiff who fails to serve a summons on the defendant has failed to serve process and cannot benefit from the entry of a default judgment because the trial court never acquired jurisdiction over the defendant. While Code § 8.01-288 states that process which has reached the person to whom it is directed within the time prescribed by law shall be sufficient although not served or accepted as provided in the Code of Virginia, this provision, by its plain language, applies only when "process" has reached the person to whom it is directed. "Process" under Code § 8.01-288 is the same "process" as defined under Rule 3:3(c). See Lifestar Response of Maryland, 267 Va. 720, 594 S.E.2d 589.

- 285 -

- 286 -

Notes on People and Service

Minors and Persons with Disabilities. It appears that suit may be commenced by service against minors and persons suffering from mental or other disability in the fashion discussed above. A guardian ad litem should promptly be sought, as a judgment obtained without such representation will be void. See generally § 8.01-9. Nonresidents. Service made while a nonresident happens to be in Virginia is generally valid. But see note below on immunity from service in some circumstances. Some common circumstances involving service on non residents include: Motor vehicle or aircraft accidents in or over Virginia (§§ 8.01-307 et seq. permit service upon the commissioner of motor vehicles of the Secretary of the Commonwealth [aircraft]); nonresident real estate agents (§§ 54-773 and -774 permit serving the Secretary of the Real Estate Commission); nonresident building contractors (§ 54-160 allows service on the Secretary of the Commonwealth). Persons who may serve process. Generally the sheriff of a city or county may make service § 8.01-293; § 15.1-796 in the locality where he serves and contiguous localities. § 8.01-295 The sheriff files a return of service form. Secondly, persons 18 years of age or older may also serve process so long as they are not parties nor interested in the outcome of the litigation; return is by affidavit. § 8.01-293, § 8.01-325. If the sheriff attempts to serve process outside his regular bailiwick or the immediately contiguous localities the service will be effective, but it is treated as service by an adult non-party rather than by a sheriff acting in official capacity since the officer's statutory jurisdiction does not extend to the distant localities. Thus the return of service will not be accorded the stringent presumption of verity accorded to one from a sheriff who served process in his own bailiwick, and a default judgment may not be available without further showings. An alternative in such situations is for the clerk of court to forward process from the city or county where the action has been filed to the clerk of court where the defendant is to be served. The receiving clerk will deliver the process to the sheriff of that area, who will effect service. Negating Higher Forms of Service. Because of the Virginia doctrine noted earlier in this Chapter, that higher forms of personal service must be attempted before less direct forms of service are permitted, the return of service papers should "negate" higher forms of service, by reciting efforts to effectuate personal service before the serving person resorted to other means of service.

- 287 -

Key Service of Process Code Sections

§ 8.01-275.1. When service of process is timely Service of process in an action or suit within twelve months of commencement of the action or suit against a defendant shall be timely as to that defendant. Service of process on a defendant more than twelve months after the suit or action was commenced shall be timely upon a finding by the court that the plaintiff exercised due diligence to have timely service made on the defendant.

§ 8.01-290. Plaintiffs Required to Furnish Full Name and Last Known Address of Defendants, etc. Upon the commencement of every action, the plaintiff shall furnish in writing to the clerk or other issuing officer the full name and last known address of each defendant and if unable to furnish such name and address, he shall furnish such salient facts as are calculated to identify with reasonable certainty such defendant. The clerk or other official whose function it is to issue any such process shall note in the record or in the papers the address or other identifying facts furnished. Failure to comply with the requirements of this section shall not affect the validity of any judgment.

§ 8.01-293. Authorization to serve process, capias or show cause order; execute writ of possession and levy upon property A. The following persons are authorized to serve process: 1. The sheriff within such territorial bounds as described in § 8.01-295; or 2. Any person of age 18 years or older and who is not a party or otherwise interested in the subject matter in controversy. However, in any case in which custody or visitation of a minor child or children is at issue and a summons is issued for the attendance and testimony of a teacher or other school personnel who is not a party to the proceeding, if such summons is served on school property, it shall be served only by a sheriff or his deputy. Whenever in this Code the term "officer" or "sheriff" is used to refer to persons authorized to make, return or do any other act relating to service of process, such term shall be deemed to refer to any person authorized by this section to serve process. B. Notwithstanding any other provision of law (i) only a sheriff or high constable may execute an order or writ of possession for personal, real or mixed property, including an order or writ of possession arising out of an action in unlawful entry and detainer or ejectment; (ii) any sheriff, high constable or law-enforcement officer as defined in § 9.1-101 of the Code of Virginia may serve any capias or show cause order; and (iii) only a sheriff, the high constable for the City of Norfolk or Virginia Beach or a treasurer may levy upon property.

- 288 -

§ 8.01-295 Territorial Limits Within Which Sheriff may Serve Process in his Official Capacity; Process Appearing to be Duly Served. The sheriff may execute such process throughout the political subdivision in which he serves and in any contiguous county or city. If the process appears to be duly served, and is good in other respects, it shall be deemed valid although not directed to an officer, or if directed to any officer, though executed by some other person. This section shall not be construed to require the sheriff to serve such process in any jurisdiction other than in his own.

§ 8.01-296. Manner of Serving Process upon Natural Persons. Subject to the provisions of § 8.01-286.1, in any action at law or in equity or any other civil proceeding in any court, process, for which no particular mode of service is prescribed, may be served upon natural persons as follows: 1. By delivering a copy thereof in writing to the party in person; or 2. By substituted service in the following manner: a. If the party to be served is not found at his usual place of abode, by delivering a copy of such process and giving information of its purport to any person found there, who is a member of his family, other than a temporary sojourner or guest, and who is of the age of sixteen years or older; or b. If such service cannot be effected under subdivision 2 a, then a copy of such process at the front door or at such other door as appears to be the main entrance of such place of abode, provided that not less than ten days before judgment by default may be entered, the party causing service or his attorney or agent mails to the party served a copy of such process and thereafter files in the office of the clerk of the court a certificate of such mailing. In any civil action brought in a general district court, the mailing of the application for a warrant in debt or affidavit for summons in unlawful detainer or other civil pleading or a copy of such pleading, whether yet issued by the court or not, which contains the date, time and place of the return, prior to or after filing such pleading in the general district court, shall satisfy the mailing requirements of this section. In any civil action brought in a circuit court, the mailing of a copy of the pleadings with a notice that the proceedings are pending in the court indicated and that upon the expiration of ten days after the giving of the notice and the expiration of the statutory period within which to respond, without further notice, the entry of a judgment by default as prayed for in the pleadings may be requested, shall satisfy the mailing requirements of this section and any notice requirement of the Rules of Court. Any judgment by default entered after July 1, 1989, upon posted service in which proceedings a copy of the pleadings was mailed as provided for in this section prior to July 1, 1989, is validated. c. The person executing such service shall note the date of such service on the copy of the process so delivered or posted under subdivision 2. 3. If service cannot be effected under subdivisions 1 and 2 of this section, then by order of publication in appropriate cases under the provisions of §§ 8.01-316 through 8.01-320.

- 289 -

Some Key Rules Governing Commencement of the Action

Rule 3:2. Commencement of Civil Actions. (a) Commencement. — A civil action shall be commenced by filing a complaint in the clerk's office. When a statute or established practice requires, a proceeding may be commenced by a pleading styled "Petition." Upon filing of the pleading, the action is then instituted and pending as to all parties defendant thereto. The statutory writ tax and clerk's fees shall be paid before the summons is issued. (b) Caption. — The complaint shall be captioned with the name of the court and the full style of the action, which shall include the names of all the parties. The requirements of Code § 8.01-290 may be met by giving the address or other data after the name of each defendant. (c) Form and Content of the Complaint. — It shall be sufficient for the complaint to ask for the specific relief sought. Without more it will be understood that all the defendants mentioned in the caption are made parties defendant and required to answer the complaint; that proper process against them is requested; that answers under oath are waived, except when required by law, and that all relief authorized by law and demanded in the complaint may be granted. No formal conclusion is necessary.

Rule 3:4. Copies of Complaint. (a) Copies for Service. — The plaintiff shall furnish the clerk when the complaint is filed with as many copies thereof as there are defendants upon whom it is to be served. (b) Exhibits. — It is not required that copies of exhibits filed with the complaint be furnished or served. (c) Additional copies. — A deficiency in the number of copies of the complaint shall not affect the pendency of the action. If the plaintiff fails to furnish the required number of copies, the clerk shall request that additional copies be furnished as needed, and if the plaintiff fails to do so promptly, the clerk shall bring the fact to the attention of the judge, who shall notify the plaintiff's counsel, or the plaintiff personally if no counsel has appeared for plaintiff, to furnish them by a specified date. If the required copies are not furnished on or before that date, the court may enter an order dismissing the suit.

- 290 - Rule 3:5. The Summons. (a) Form of process. — The process of the courts in civil actions shall be a summons in substantially this form: Commonwealth of Virginia In the ...... Court of the ...... of ...... SUMMONS Civil Action No. ... The party upon whom this summons and the attached complaint are served is hereby notified that unless within 21 days after such service response is made by filing in the clerk's office of this court a pleading in writing, in proper legal form, the allegations and charges may be taken as admitted and the court may enter an order, judgment or decree against such party either by default or after hearing evidence. Appearance in person is not required by this summons. Done in the name of the Commonwealth of Virginia, this ..... day of ...... , 20...... , Clerk. (b) Affixing summons for service; voluntary appearance. — Upon the commencement of a civil action defendants may appear voluntarily and file responsive pleadings and may appear voluntarily and waive process, but in cases of divorce or annulment of marriage only in accordance with the provisions of the controlling statutes. With respect to defendants who do not appear voluntarily or file responsive pleadings or waive service of process, the clerk shall issue summonses and securely attach one to and upon the front of each copy of the complaint to be served. The copies of the complaint, with a summons so attached, shall be delivered by the clerk for service together as the plaintiff may direct. (c) Defendant under a disability. Except when sued for divorce or annulment of marriage, or a judgment in personam is sought, a summons need not be issued for or served upon a defendant who is a person under a disability (except as otherwise provided in § 8.01-297), the procedure described in Code § 8.01-9 constituting due process as to such defendants. (d) Additional summonses. — The clerk shall on request issue additional summonses, dating them as of the day of issuance. (e) Service more than one year after commencement of the action. — No order, judgment or decree shall be entered against a defendant who was served with process more than one year after the institution of the action against that defendant unless the court finds as a fact that the plaintiff exercised due diligence to have timely service on that defendant.

- 291 - B. Abode Service – "Nail and Mail" and Full Faith & Credit

WASHINGTON v. ANDERSON 236 Va. 316, 373 S.E.2d 712 (1988)

JUSTICE COMPTON delivered the opinion of the Court. This appeal stems from a judgment debtor's effort to have a default judgment set aside upon the grounds (1) that a foreign judgment, upon which the domestic judgment was based, was void, and (2) that the statutory notice, required for a default judgment upon substituted service of process, was deficient. The facts are undisputed. In March 1984, appellee Maxine Anderson was granted "Summary Judgment by default" against appellant Wilbur H. Washington for $ 1,772.47, plus interest and costs, in the District Court of Maryland for Prince George's County. Washington, a Virginia resident, was served at his Fredericksburg home under Maryland's long arm statute. On July 5, 1984, Anderson filed a civil action by warrant against Washington in the General District Court of Stafford County seeking to domesticate the Maryland judgment. Process was served upon Washington by substituted service, a copy of the warrant being posted on the front door of his usual place of abode, shown on the warrant to be "805 Bellows Avenue, Fredericksburg, Stafford County, Va. 22401." Washington failed to appear on the return date of the warrant and the case was continued to October 29, 1984. On October 9, 1984, the attorney for Anderson, as required by Code § 8.01-296(2)(b), mailed a copy of the warrant to Washington at the address given on the original process. Washington failed to appear on October 29 and judgment by default was entered against him for $ 1,772.47 with interest and costs based on evidence of the Maryland judgment. The domestic judgment became final without appeal. Subsequently, the judgment debtor was served in person at the Bellows Avenue address with a summons to answer interrogatories concerning his property and other assets. This was issued by the general district court at the request of the judgment creditor in January 1985. The judgment debtor then filed a motion asserting the Virginia default judgment was void and asked the court to set it aside. See Code § 8.01-428(A) (upon motion and notice, court may set aside judgment by default "upon the following grounds: . . . (ii) a void judgment"). Among the reasons assigned by the judgment debtor in support of his motion were: that he was not properly served with process in the Virginia proceeding; that he did not receive the required statutory notice preliminary to entry of that judgment; that he did not receive any notice and was not properly served with process in the Maryland proceeding; that certain Maryland procedural requirements were not followed in connection with the foreign judgment; and that personal jurisdiction over him was not

- 292 - established under the Maryland long arm statute. The general district court denied the motion and Washington appealed to the circuit court. The circuit court conducted a hearing on the motion at which only the judgment debtor testified. He stated "that he did not receive any type of notice and was not served with any paper of any type" in either the Maryland proceeding or the Virginia proceeding which resulted in the default judgment. He said that he first became aware of Anderson's claim when he was served with the interrogatory summons. In addition, the judgment debtor presented copies of all the court documents in connection with the Maryland judgment. At the conclusion of the judgment debtor's evidence, the court sustained the judgment creditor's motion to strike the evidence. The court ruled: that the Maryland judgment could not be collaterally attacked in a proceeding to declare the Virginia judgment void and that evidence as to any improper service of process in connection with the Maryland judgment was inadmissible; that Washington had failed to establish a prima facie case of improper service in the Virginia proceeding based on the alleged insufficiency of the statutory notice; and that, because the general district court had jurisdiction over the subject matter and over the judgment debtor's person, the default judgment was valid. We awarded the judgment debtor an appeal from the August 1985 order denying the motion to set aside the default judgment. On appeal, the judgment debtor raises two issues. First, he contends that in a proceeding to declare a Virginia judgment void, "evidence and testimony regarding improper service of process in a Court proceeding in a foreign state is admissible to attack the validity of a foreign judgment so as to prohibit it from enjoying full faith and credit in Virginia." This contention requires us to decide to what extent, if any, a Virginia court may inquire into the validity of a foreign judgment after the defendant has suffered an unappealed, final default judgment in the Virginia proceeding to domesticate the foreign judgment. If the foreign judgment may be collaterally attacked in this manner, evidence pertaining to the jurisdiction of the foreign court is admissible. If, however, the foreign judgment may not be so attacked, evidence about foreign jurisdiction is irrelevant and hence inadmissible. The judgment debtor principally relies on Bloodworth v. Ellis, 221 Va. 18, 267 S.E.2d 96 (1980). There, reversing a trial court's action in refusing to receive evidence challenging a foreign court's jurisdiction, we noted the general rule that a court which is asked to give effect to the judgment of a court in another state may inquire into the foreign court's jurisdiction without offending the Full Faith and Credit Clause. Id. at 21, 267 S.E.2d at 98. We said that the party challenging the jurisdiction of a sister state's court may establish the absence of such jurisdiction by either extrinsic evidence or the record of the foreign proceeding. Id. at 24, 267 S.E.2d at 100. Bloodworth, however, is not controlling. In Bloodworth, the attack on the foreign judgment had been mounted during the actual domestication proceeding and before any judgment had been entered in Virginia based on the foreign judgment. The present case differs in two respects: a default judgment had been entered in the domestication proceeding and the foreign judgment was attacked as void in a proceeding subsequent to the domestication of the foreign judgment. Once a valid default judgment has been entered in a Virginia court in a proceeding to domesticate a foreign judgment, general rules applicable to challenges permitted in

- 293 - the domestication proceeding no longer apply. By suffering a default, the defendant in the domestication proceeding has lost the opportunity to attack the foreign judgment upon which the Virginia proceeding was based. If the rule were otherwise, certainty in the result of judicial proceedings in the Commonwealth would be destroyed. Diligence and vigilance would cease to be the rule and the high degree of finality that we attach to judgments in this State would be impaired. See Landcraft Co. v. Kincaid, 220 Va. 865, 874, 263 S.E.2d 419, 425 (1980). Thus, it was incumbent upon the judgment debtor to challenge the Maryland judgment in the course of the domestication proceeding. Having failed to do so, the judgment debtor will not be heard now to complain that the Maryland court lacked jurisdiction. Therefore, the circuit court properly ruled that evidence relating to the foreign court's jurisdiction was irrelevant and inadmissible. But was the Virginia default judgment valid? This brings us to the judgment debtor's second contention. He argues he established, prima facie, that "he was improperly served in the proceeding in the General District Court of Stafford County." The sole reason he assigns for this contention is that the "mailing requirement under service by posting was not followed." Code § 8.01-296(2)(b) provides that if substituted service of process is made by posting a copy of the process at the front door of the defendant's usual place of abode, a default judgment may not be entered unless, within ten days before judgment by default, "the party causing service mails to the party served a copy of the pleading and thereafter files in the office of the clerk of the court a certificate of such mailing." The judgment debtor notes that the evidence showed he resided at the Bellows Avenue address in Fredericksburg and that his "mailing address" was P.O. Box 390, Fredericksburg, Virginia 22404. He also notes that the statutory certificate filed by the judgment creditor recites that notice was mailed to "the address given on the original process," the Bellows Avenue address. Washington argues that the statute requires notice to be "mailed to a mailing address of the defendant or to an address to which the defendant receives mail." He asserts that because he received his mail from the post office box, which was his mailing address, he was not "mailed" a copy of the pleading as mandated by the statute when it was sent to his residence address. He contends that service of process was incomplete, therefore invalid, and that the default judgment was void. We reject this contention. Construing sub-item (b) of subdivision (2) of § 8.01-296, we hold that when the party causing service of process mails a copy of the pleading to the party served at a place where that party may receive mail, there has been compliance with the statutory directive "mails to the party served." In the present case, there was no showing that the judgment debtor did not or could not receive delivery of mail at his residence. The mailing of correspondence, properly addressed and stamped, raises a presumption of receipt of the correspondence by the addressee. Manassas Park Development Co. v. Offutt, 203 Va. 382, 385, 124 S.E.2d 29, 31 (1962). Thus, the statutory notice was not deficient and the service of process to support the default judgment was valid. . .

- 294 - Note on the "Mailing Requirement"

Mailing Requirement. The current language of Code § 8.01-296(b) appears to permit a plaintiff to include a notice of potential default along with the copy of process served by mail, rather than requiring a separate and additional mailing to convey that warning.

C. Serving Domestic Corporations, Partnerships, and Associations

Summary Code §§ 8.01-299, 13.1-634 and -637 (stock) and 13.1-833 and -836 (nonstock)) provide for service on private corporations. (Regarding service upon municipal and county governments and quasi-governmental bodies or agencies, see § 8.01-300). The alternatives provided include means of personal and substituted service: z Personal service on any officer, director, or registered agent of such corporation wherever he may be found. The preferred form of service is upon the registered agent, whose identity may be learned from the clerk of the corporation commission. z "Substituted service" on a registered agent. z Where a registered agent has not been appointed or cannot reasonably be found at the registered office, service may be upon the Clerk of the State Corporation Commission for all process except that issued by the Commission. In such a proceeding notice is sent by registered or certified mail to the corporation at its principal office. z "Waiver" of service pursuant to the current statutory procedure.

Where a corporation is being operated by trustee or receiver § 8.01-303 provides that process may be served on any one of its trustees or receivers. If no such service may be had upon any of them, then process may be served by any other mode provided for service on a corporation. Unincorporated associations. Under §§ 8.01-305 and -306 process may be served on any officer or trustee, director, staff member, or agent where he may be found (Note: this is different from corporations, where service must be on an officer, director, or registered agent). If the unincorporated entity's principal office is outside Virginia, but the association does business here, service may be made as above and also on the Clerk of the State Corporation Commission. Partnerships. § 8.01-304 provides that service may be made on any general partner. Service on a limited partner would be sufficient to gain jurisdiction over him, but not the partnership itself.

- 295 -

KHATCHI v. LANDMARK RESTAURANT ASSOCIATES 237 Va. 139, 375 S.E.2d 743 (1989)

JUSTICE RUSSELL delivered the opinion of the Court. This appeal turns upon Code § 8.01-329(A1), which prescribes the affidavit requisite for long-arm service of process. In 1982, Rosie Khatchi and her husband owned a building at 4111 Duke Street, in Alexandria. They leased the property to three individuals who were principals in Landmark Restaurant Associates, Inc., a Virginia corporation. The corporation operated a restaurant business in the building. In November 1983, Mrs. Khatchi (the plaintiff) filed a motion for judgment against the corporation (the defendant), alleging that on March 10, 1982, as a patron of the restaurant, she had tripped on a projecting metal strip, fallen, and sustained injuries. The caption of the motion for judgment contained the words SERVE: William L. Roberts Registered Agent 4111 Duke Street Alexandria, Virginia 22304. A deputy sheriff filed a "not found" return on November 9, 1983, to which was appended a note to the effect that the premises were closed for remodeling. On December 1, 1983, D. Brian Costello, the plaintiff's attorney, filed an affidavit to the effect that the "last known address of the registered agent" was at 4111 Duke Street, Alexandria, and that “after due diligence the petitioner in this cause has been unable to obtain service against the above named defendant.” The affidavit was subscribed and sworn to by Mr. Costello, not by the plaintiff. Counsel thereafter arranged for service of process upon the Secretary of the Commonwealth pursuant to the long-arm statute. Such service was made by the Sheriff of the City of Richmond on December 12, 1983, pursuant to Code § 8.01-329(B). On January 11, 1984, counsel for the plaintiff secured entry of an order awarding judgment by default and continuing the case for ex parte determination of damages by a jury. On February 6, 1984, a jury heard evidence ex parte and fixed the plaintiff's damages at $283,000. On March 21, 1984, the defendant appeared by counsel and moved the court to vacate the default judgment, alleging that service of process was invalid and that the default had been procured by fraud. The court heard evidence on the motion and, by letter opinion, ruled that the affidavit for long-arm service had been defective. Consequently, the court did not reach the defendant's allegations of fraud. The court entered an order vacating the default judgment and continuing the case for jury trial on the merits. The case was tried to a jury in September 1985, resulting in a verdict for the defendant. We awarded the plaintiff an appeal from a final order of

- 296 - judgment on this second verdict. The sole issue on appeal is whether the court was warranted in setting aside the default judgment on the ground of invalid service of process. The plaintiff assigned no error with regard to the second trial. On appeal, as in the trial court, the defendant contends that the long-arm statute was designed to subject nonresidents, individuals who cannot be located, and foreign corporations to personal jurisdiction in a proper case, but that it was never intended to supplant Code § 8.01-299 as the method for obtaining service upon a domestic corporation. The trial court found it unnecessary to decide this question because the court determined that the plaintiff had not followed the steps prerequisite to obtaining long-arm jurisdiction even if the long-arm statute were applicable. We agree with the trial court's analysis. If we assume, without deciding, that the plaintiff was entitled to invoke long-arm jurisdiction over a domestic corporation, she nevertheless failed to do so. Code § 8.01-329(A1) provides that a party seeking to acquire long-arm jurisdiction through service upon the Secretary of the Commonwealth "shall file an affidavit with the court, stating either (i) that the person to be served is a nonresident or (ii) that, after exercising due diligence, the party seeking service has been unable to locate the person to be served" (emphasis added). The affidavit filed by plaintiff's counsel stated neither of these alternatives, but instead stated that "petitioner in this cause has been unable to obtain service against the above named defendant" (emphasis added). Where a defendant has received personal service of process, irregularity will not defeat the court's jurisdiction, but if a statute provides for constructive service, the terms of the statute authorizing it must be strictly followed or the service will be invalid and any default judgment based upon it will be void. Crockett v. Etter, 105 Va. 679, 681, 54 S.E. 864, 865 (1906). Under the facts of this case, the difference between the affidavit filed and the statutory requirement was significant. At the time the suit was filed and service upon the registered agent was attempted, the restaurant in the building the plaintiff owned was closed for remodeling. The address of the restaurant was the registered office of the defendant corporation. The plaintiff's husband admitted that he knew the residence address of the registered agent, who was a principal in the defendant corporation, and that he also knew where other officers and directors lived. Therefore, service could readily have been obtained under Code § 8.01-299. There is no evidence that plaintiff's counsel had this information, but there existed a substantial basis for the conclusion that the plaintiff herself could probably not have given an affidavit that she was "unable to locate" the person to be served, as required by the long-arm statute. The affidavit given by her counsel fell significantly short of the mark. Assuming the applicability of the long-arm statute, we think the affidavit given in support of long-arm service was insufficient. The only service of process purportedly made upon the defendant was invalid and the default judgment was void. The trial court, therefore, correctly vacated the default judgment and set the case down for a new trial. Accordingly, the judgment will be affirmed.

- 297 - D. Serving Foreign Corporations

In addition to the option of obtaining a waiver of service of process under §8.01- 286.1, service of process on a foreign corporation may be effected in any of three ways under § 8.01-301: 1. By personal service on any officer or director in Virginia, on the Virginia registered agent of a foreign corporation authorized to do business here, or any agent in Virginia of a foreign corporation transacting business in Virginia without such authorization. If the corporation is engaged in sufficient business activity but has not qualified to do business in the Commonwealth or appointed a registered agent, service may be made upon the clerk of the Corporation Commission. 2. Substituted service (§ 13.1-766, for stock and -928 for non-stock) by delivery to a registered agent's designee or the Corporation Commission if such corporation is authorized to transact business in Virginia or on the Secretary of the Commonwealth if plaintiff is proceeding under the long-arm statute. 3. By order of publication (§§ 8.01-316 and -317) [Note: just as when used against individuals, this option apparently provides only unless defendant makes a general appearance or some other circumstance converts the jurisdiction over the defendant to full in personam power.] Of course, even if the foreign corporation is validly (i.e., appropriately) served, the Virginia court may not have jurisdiction if sufficient minimum contacts to satisfy Due Process are not present.

E. Statutory Agents of Non-Resident Motorists

Under Virginia Code § 8.01-308, the operation in the Commonwealth of a motor vehicle by a nonresident -- either in person or by an agent or employee – is deemed equivalent to an appointment by such nonresident of the Commissioner of the Department of Motor Vehicles to be the statutory agent of such nonresident for the purpose of service of process in any action against him growing out of any accident or collision in which such nonresident, his agent, or his employee may be involved while operating motor vehicles in this Commonwealth. Further, Code § 8.01-310 provides that service of process on either the Commissioner of the Department of Motor Vehicles as authorized under § 8.01-308 or on the Secretary of the Commonwealth as authorized under § 8.01-309, shall be made by leaving a copy of such process together with a fee of $ 15 for each party to be thus served, in the hands, or in the office, of the Commissioner or Secretary. Code § 8.01-312 then requires that this official "shall forthwith send by registered or certified mail, with return receipt requested, a copy of the process to the person named therein and for whom the statutory agent is receiving

- 298 - the process." The office of the government official then sends an affidavit of compliance with this section with the papers in the action; this filing shall be made in the office of the clerk of the court in which the action is pending. No further steps are required.

F. Service by Mail – Not !

Unlike Federal practice, there is no general "service by mail" rule in Virginia. Compare F.R.Civ.P. 4(c)(2)(C)(ii). Mailing plays a significant role in Virginia service as part of the "posting" procedure when the defendant is not found at his usual place of abode and a copy of the process is affixed to the door. Mail is employed in the substituted service regimes where a state agency completes service by mailing (e.g., the Division of Motor Vehicles, the Secretary of the Commonwealth, and the Secretary of the Corporation Commission). Finally, in at least one specialized statutory system, dealing with the triggering of uninsured or underinsured motorist coverage, mail service is contemplated. See Davis v. American Interinsurance Exchange, 228 Va. 1, 319 S.E.2d 723 (1984).

- 299 - G. Service by Publication.

Overview of the Procedure Code §§ 8.01-316 et seq. govern this constructive service device. In general it is said that service by publication yields only jurisdiction in rem, or quasi in rem. It is useful for determining rights to property, and in status actions such as the proceeding for divorce. Most of the circumstances in which service is made by publication are found in suits in equity. Because this procedure has little assurance of actually providing notice to a defendant, it is only available when the plaintiff demonstrates that there is need for it in the fashion prescribed by the statute. In general, an affidavit must be filed on behalf of the plaintiff reciting that circumstances exist in which an order of publication may be entered. The affidavit must also state last known post-office address of the party to be served or, if it is unknown, the affidavit must represent that fact. If there are or may be unknown interested parties, the pleading must so state. The Virginia Supreme Court has held that it must be reasonably probable that defendant or someone acting on his behalf would receive notice of the proceeding in order to take precautions to protect interest. To this end, 9 The interest of the unknown person must be described. 9 The unknown persons must be made parties. 9 Identifying data must be included, e.g., the class to which an unknown party belongs or the source of any claim he might have. 9 Failure to reasonably notify defendant that his rights might be affected renders judgment void. The statute also provides that the publication procedure may also be used in any proceeding where more than ten defendants are served and it appears that they represent like interests with the parties unserved. There is almost no caselaw on this provision; see also the Note below, "Constitutional Gloss". The order of publication may be entered by the Court or the clerk in most situations. The required contents of an order are provided for in § 8.01-317. Publication is normally achieved by printing once a week for 4 successive weeks in a newspaper prescribed by the court. In addition, the clerk must mail a copy of the process to each defendant whose address is given in the affidavit, and post a copy at the courthouse door. The case matures for hearing, under § 8.01-318, on the date specified in the order, but not sooner than 50 days after entry of the order of publication. § 8.01-317. [Note: where service has been made on a nonresident personally, and the circumstances are deemed equivalent to service by publication under § 8.01-320, response is due in 21 days.] After the publication, no further notice is required as to defendants or unknown parties (§ 8.01-318) except: ‹ To counsel for those who appear by counsel;

- 300 - ‹ To each defendant pro se at the address he or she gives the clerk (§ 8.01- 319(A)); ‹ As specially ordered by the Court; ‹ Interim notices, e.g. of deposition, may be published as provided in § 8.01-319. However, in divorce cases if, after defendant has been legally served with or has accepted service to commence divorce/annulment, defendant cannot be found and is not represented by counsel, publication is waived. § 8.01-319(B). The publication statute is important. It provides:

§ 8.01-316. Service by Publication; When Available. A. Except in condemnation actions, an order of publication may be entered against a defendant in the following manner: 1. An affidavit by a party seeking service stating one or more of the following grounds: a. That the party to be served is (i) a foreign corporation, (ii) a foreign unincorporated association, order, or a foreign unincorporated common carrier, or (iii) a nonresident individual, other than a nonresident individual fiduciary who has appointed a statutory agent under § 26-59; or b. That diligence has been used without effect to ascertain the location of the party to be served; or c. That the last known residence of the party to be served was in the county or city in which service is sought and that a return has been filed by the sheriff that the process has been in his hands for twenty-one days and that he has been unable to make service; or 2. In any action, when (i) a pleading states that there are or may be persons, whose names are unknown, interested in the subject to be divided or disposed of; (ii) briefly describes the nature of such interest; and (iii) makes such persons defendants by the general description of "parties unknown"; or 3. In any action, when (i) the number of defendants upon whom process has been served exceeds ten, and (ii) it appears by a pleading, or exhibit filed, that such defendants represent like interests with the parties not served with process. Under subdivisions 1 and 2 of this section, the order of publication may be entered by the clerk of the court. Under this subdivision such order may be entered only by the court. Every affidavit for an order of publication shall state the last known post- office address of the party against whom publication is asked, or if such address is unknown, the affidavit shall state that fact. B. The cost of such publication shall be paid initially by the party seeking service; however, such costs ultimately may be recoverable pursuant to § 17.1- 601.

- 301 - A follow-up section gives details of the requirements: § 8.01-317. What Order of Publication to State; How Published; When Publication in Newspaper Dispensed With. Except in condemnation actions, every order of publication shall give the abbreviated style of the suit, state briefly its object, and require the defendants, or unknown parties, against whom it is entered to appear and protect their interests on or before the date stated in the order which shall be no sooner than fifty days after entry of the order of publication. Such order of publication shall be published once each week for four successive weeks in such newspaper as the court may prescribe, or, if none be so prescribed, as the clerk may direct, and shall be posted at the front door of the courthouse wherein the court is held; also a copy of such order of publication shall be mailed to each of the defendants at the post office address given in the affidavit required by §8.01- 316. The clerk shall cause copies of the order to be so posted, mailed, and transmitted to the designated newspaper within twenty days after the entry of the order of publication. Upon completion of such publication, the clerk shall file a certificate in the papers of the case that the requirements of this section have been complied with. Provided, the court may, in any case where deemed proper, dispense with such publication in a newspaper. The cost of such publication shall be paid by the petitioner or applicant.

Canon of Strict Construction. Requirements for the order of publication are strictly construed and enforced. For example, names must be substantially correct. See, e.g., Steinman v. Jessee, 108 Va. 567, 62 S.E. 275 (1908)(mistake between "Steinman" and "Stinman" in the publication created defective service). Occasionally an error is not fatal, but these cases are rare and usually involve vested rights of third parties. See, for example, Robertson v. Stone, 199 Va. 41, 97 S.E.2d 739 (1957), where notice was published in a partition suit named a co-owner as "Robinson" when her true name was "Robertson." The partition judgment was left undisturbed when she later petitioned for relief, claiming lack of knowledge of the proceedings. The facts, however, showed that she regularly got mail – and had indeed been sued – under the name of "Robinson." Moreover, the property had been sold to innocent third-parties after the partition action and the Court did not want to disturb that transaction for a "technical" error. Notice to Unnamed Persons. The overall goal of the notice approved by the trial court in publication situations is to alert prospective interested parties. Thus great care is required if the notice is to alert "all persons interested in X property" or "the heirs of decedent X" to make sure that the description conveys information needed to alert readers of the published notice. For a quaint survey of these concerns, see Forrer v. Brown, 221 Va. 1098, 277 S.E.2d 483 (1981)(quoting an example notice that failed to alert certain persons interested in the property).

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- 302 - H. Who is a "Nonresident" for Use of Publication Service.

While publication service is commonly used for unknown heirs or property claimants, it can also be used under the present statutes to serve a "nonresident." The interlacing of the statutes for use of this provision has highlighted the requirements a plaintiff must satisfy before taking advantage of this form of "service," which often leads to a default that is quite beneficial for the plaintiff. The restraints on a plaintiff's option to serve a "nonresident" thus prevent abuse, as the next case illustrates.

DENNIS v. JONES 240 Va. 12, 393 S.E.2d 390 (1990)

JUSTICE COMPTON delivered the opinion of the Court: [In a personal injury action arising from a motor vehicle collision, defendant was a college student. Plaintiff's attorney made a few lame attempts to locate her, and then filed an affidavit asserting that defendant was a nonresident, and process was served upon the Commissioner of the DMV as statutory agent for defendant, as provided by applicable statutes. A $50,000 default judgment resulted. ] In November 1987, defendant began moving from the Stafford Avenue apartment to a Deepwood Circle address in suburban Richmond. During that month, Virginia Power Company "cut on" defendant's electric service at the Deepwood Circle address and the local telephone company disconnected service at the Stafford Avenue address, commencing service at the new address with a different, listed telephone number. In December 1987, defendant notified the Richmond office of the U.S. Postal Service in writing of the change from the Stafford Avenue address to the Deepwood Circle address. The change became "official" with the postal service on December 5. On February 16, 1988, upon request of plaintiff's attorney, the clerk issued process on the motion for judgment to be served at the Stafford Avenue address. On this day, defendant notified the DMV of her Deepwood Circle address, she completed her move to the new address, and "somebody else moved in" the Stafford Avenue apartment. In a return dated February 19, 1988, a Richmond deputy sheriff reported his unsuccessful attempt to execute the process at the Stafford Avenue address. The officer wrote: "Front door kept locked - unable to enter for service. Name not listed on outside directory. One source states, the mail box for #1 is completely full of mail, appears no one has picked up same for 10 days plus." The return was received in the clerk's office of the trial court on February 24. On April 6, 1988, plaintiff's attorney executed an affidavit and forwarded it to the clerk with a request that service of process be made upon the Commissioner of the DMV. The affidavit stated, as pertinent: "(1) that the above named defendant, Ellen Dennis is not a resident of the State of Virginia; (2) that the plaintiff does not know and is unable with due diligence to ascertain any post office address of the nonresident defendant; (3)

- 303 - that the last known address of the defendant was 210 North Stafford Avenue, Apartment #1, Richmond, Virginia 23220; and (4) that a return has been filed by the sheriff that the process has been in his hands for twenty-one (21) days and that he has been unable to make service." In an Affidavit of Compliance, the DMV reported that process was forwarded on May 2, 1988 by certified mail, as required by statute, to defendant at the Stafford Avenue address. Defendant testified that she did not receive the DMV mailing and that she failed to receive any other notice of the action against her until after entry of the default judgment. Defendant further testified that she "was never a nonresident [of Virginia] for more than say a week," and said, "as far as I am concerned, I'm a resident" of the Commonwealth. Plaintiff's attorney, in commenting on the efforts made to locate defendant, represented to the trial court that he made "informal contacts" with certain unnamed acquaintances employed by the DMV and the "state police" to obtain an address for the defendant. These "contacts," according to counsel's representation, were made prior to the time service of process was attempted by the sheriff. No further "contacts" were attempted before the affidavit was executed and service was attempted through the DMV. Although not set forth in any order of the trial court, it appears from the record that the court ruled plaintiff's attorney had used diligence to determine defendant's location before requesting service through the DMV. . . . According to Code § 8.01-308, the operation of a motor vehicle in the Commonwealth by a "nonresident," including those defined in Code § 8.01-307(2), is deemed equivalent to an appointment by the nonresident of the Commissioner of the DMV to be the statutory agent of such nonresident for the purpose of service of process in any action against the nonresident growing out of any accident involving the operation by the nonresident of a motor vehicle in the Commonwealth. "Service of process on the statutory agent shall have the same legal force and validity as if served within the Commonwealth personally upon the person for whom it is intended." Code § 8.01-312(A). Under Code § 8.01-307(2), the term "nonresident" includes any person who, though a resident of the Commonwealth when the accident happened, has been continuously outside the state for at least 60 days next preceding the date when the process is left with the DMV commissioner, "and includes any person against whom an order of publication may be issued under the provisions of § 8.01-316." Code § 8.01-316 provides, as pertinent, that an order of publication may be entered against a defendant in the following manner: 1. An affidavit by a party seeking service stating one or more of the following grounds: a . That the party to be served is . . . (iii) a nonresident individual . . .; or b. That diligence has been used without effect to ascertain the location of the party to be served; or

- 304 - c . That the last known residence of the party to be served was in the county or city in which service is sought and that a return has been filed by the sheriff that the process has been in his hands for twenty-one days and that he has been unable to make service; . . . Every affidavit for an order of publication shall state the last known post-office address of the party against whom publication is asked, or if such address is unknown, the affidavit shall state that fact."

The purpose of an order of publication, which is in lieu of process, is to bring the defendant into court, to apprise the defendant of the nature of the proceedings, and to notify the party that his or her rights will be affected by the litigation. "Because the notice is constructive only, the order of publication and the statute authorizing it both must be strictly construed." Forrer v. Brown, 221 Va. 1098, 1105, 277 S.E.2d 483, 486 (1981). Measured by that standard, the affidavit upon which the process in this case was based fulfilled none of the requirements of (a), (b), or (c) of § 8.01-316(1). At the outset, it should be emphasized that, even though § 8.01-316 provides that the party seeking service shall file an affidavit "stating" one or more of the required grounds, the grounds so stated must, in fact, be true, and not merely idle declarations having no factual basis. First, the affidavit set forth that defendant was "not a resident of the State of Virginia." That representation had no basis in fact. At all pertinent times, according to the uncontradicted evidence, defendant had resided in the Commonwealth, leaving the state for only one week at a time. Thus, she was not "a nonresident individual," within the meaning of subsection (1)(a) of § 8.01-316. Second, the affidavit stated "that the plaintiff does not know and is unable with due diligence to ascertain any post office address of the nonresident defendant." Without question, neither the plaintiff nor his attorney knew defendant's location. But this was because plaintiff, through his attorney, failed to use the statutorily mandated "diligence" to ascertain defendant's address. The noun "diligence" means "devoted and painstaking application to accomplish an undertaking." Webster's Third New International Dictionary 633 (1981). Cf. STB Marketing Corp. v. Zolfaghari, 240 Va. 140, 144, 393 S.E.2d 394, 397, (1990), decided today (defining due diligence to reasonably discover in context of statute of limitations in action for fraud). The determination whether diligence has been used is a factual question to be decided according to the circumstances of each case. Mackie v. Davis, 2 Va. (2 Wash.) 219, 226, 228 (1796). Mere "informal contacts" with unnamed friends at two governmental agencies, made only prior to the sheriff's effort to serve process, do not demonstrate "devoted and painstaking" efforts to locate defendant, especially where, as here, the evidence establishes without conflict that routine methods were readily available to plaintiff. Prior to the April 1988 execution of the affidavit, defendant had a listed telephone number, her mailing address had been changed officially by the U.S. Postal Service, her new address had been serviced by the local electric utility, and the DMV had recorded her new address. Plaintiff could have located defendant either by a simple telephone call, by paying a small fee to the DMV, or by employing a subpoena for records, as he did in seeking his own employment records. Consequently, the trial court's finding that

- 305 - plaintiff used diligence was contrary to the evidence and erroneous as a matter of law. Hence, the plaintiff has not complied with subsection (1)(b) of § 8.01-316. Third, no return had been filed by the Richmond sheriff that the process had been in his hands for 21 days and that he had been unable to make service. According to the record, only eight days elapsed between the day the clerk issued process, February 16, and the day the return was received by the clerk, February 24, after service had been attempted. Clearly, the process had not been in the sheriff's hands for the time required by subsection (1)(c) of § 8.01-316. Consequently, the attempt to serve defendant through the DMV was ineffective, and personal jurisdiction was not obtained over her. Therefore, the default judgment was void and should have been set aside under the provisions of Code § 8.01-428(A). Defendant argues that if we declare the judgment void, the action must be dismissed according to Rule 3:3. The Rule provides, as pertinent: "No judgment shall be entered against a defendant who was served with process more than one year after the commencement of the action against him unless the court finds as a fact that the plaintiff exercised due diligence to have timely service on him." In response, plaintiff reasserts that due diligence was used to procure timely service on defendant. We have previously decided this question against plaintiff. Thus, the action must be dismissed under Rule 3:3 because it has been pending since 1987, and defendant has not been served with valid process. Hence, the trial court's order refusing to set the default judgment aside will be reversed, the default judgment will be reversed and annulled, and the action will be dismissed with prejudice.

- 306 -

Relief from Judgments Obtained After Publication and Default

Even where the statutory requirements are met, a party served by publication generally may within two years appear and have any injustice corrected under § 8.01- 322. "Injustice" includes settlement conferring benefits on parties appearing but not those who did not appear. Code § 8.01-322 is intended to protect a party who has no knowledge of litigation affecting him. Stephens v. Stephens, 229 Va. 610; 331 S.E.2d 484 (1985). The governing Code section reads: § 8.01-322. Within What Time Case Reheard on Petition of Party Served by Publication, and any Injustice Corrected. If a party against whom service by publication is had under this chapter did not appear before the date of judgment against him, then such party or his representative may petition to have the case reheard, may plead or answer, and may have any injustice in the proceeding corrected within the following time and not after: 1. Within two years after the rendition of such judgment, decree or order; but 2. If the party has been served with a copy of such judgment, decree, or order more than a year before the end of such two-year period, then within one year of such service. For the purpose of subdivision 2 of this section, service may be made in any manner provided in this chapter except by order of publication, but including personal or substituted service on the party to be served, and personal service out of the Commonwealth by any person of eighteen years or older and who is not a party or otherwise interested in the subject matter in controversy.

Note, however, that a defendant who actually received personal or substituted service or who had actual knowledge of the suit at the commencement of the litigation and fails to protect his interest accepts the risk of an unfavorable result. See Mitchell v. Mitchell, 227 Va. 31, 314 S.E.2d 45 (1984).

- 307 -

Note: Constitutional Gloss on Going Beyond Mere Publication.

In Tulsa Professional Collection Services v. Pope, 485 U.S. 478 (1988), reviewing an Oklahoma statute which permitted notice by publication for certain probate proceedings, the Supreme Court of the United States noted that Mullane v. Central Hanover Bank and Trust Co., 339 U. S. 306 (1950) held that state action that adversely affects property interests must be accompanied by such notice as is reasonable under the particular circumstances, balancing the State's interest and the due process interests of individuals, and Mennonite Board of Missions v. Adams, 462 U. S. 791 (1983) generally requires actual notice to an affected party whose name and address are "reasonably ascertainable." In the Tulsa case the Court held that if a person's identity as one whose claim should be adjudicated in the proceeding was known or "reasonably ascertainable" by appellee, the Due Process Clause of the Fourteenth Amendment, as interpreted by Mullane and Mennonite, requires that appellant be given notice by mail or such other means as is certain to ensure actual notice. Where a person's claim is properly considered a property interest it is protected by the Clause. The judicial resolution of claims involves government action so pervasive and substantial that it must be considered state action. Nor can there be any doubt that procedures for service of notice may "adversely affect" protected property interests, since, in the case before it, untimely claims are completely extinguished. The Court found that, on balance, satisfying creditors' substantial, practical need for actual notice in the probate setting is not so cumbersome or impracticable as to unduly burden the State's undeniably legitimate interest in the expeditious resolution of the proceedings, since mail service (which the Court noted is already routinely provided at several points in the probate process) is inexpensive, efficient, and reasonably calculated to provide actual notice. Finally, the Court held that publication notice will suffice for creditors whose identities are not ascertainable by reasonably diligent efforts or whose claims are merely conjectural.

- 308 - I. Service in Person Outside the Commonwealth

Sketch of the Issue The effect of service by publication – even if it is accomplished with perfect accuracy under the statute – is thought to accord the trial court with in rem jurisdiction. That is, the court is empowered to enter a judgment respecting the rights of the parties (including non-residents who have been “served” by publication) but only to the extent of the property that is within the court’s jurisdiction. Thus, for example, the court can allocate ownership of property, and authoritatively declare that all rights to the property are terminated. If this understanding is correct, however, it cannot enter a personal judgment against the non-resident for a separate sum of money that can be enforced in some other jurisdiction. Such a restriction on the effect of service by publication makes some sense, given the unreality of the presumption of notice provided by publication, and the fact that in the property cases where publication is used, it is the court’s dominion over the property itself that provides the greatest chance that word of the litigation will reach the interested persons. Hence limiting the court’s judicial power to the extent of the property within its control is perhaps appropriate. Personal Service Outside the Commonwealth. Stunningly, Virginia law for nearly two centuries prior to 1997 provided that personal service on a defendant outside the Commonwealth provided a plaintiff with merely "in rem" jurisdiction. That is, if a party went to the trouble and expense of sending a process server to the nonresident’s home, and personally delivered process to the defendant there, in personam jurisdiction was not obtained and the Virginia court’s power was limited to the extent of any property of the defendant in Virginia. The restriction was created at a time when the governing law of personal jurisdiction was Pennoyer v. Neff, and the assumption was that assertions of jurisdiction outside the geographical territory of the forum state were invalid. This limitation became enshrined in a statute in Virginia. Mitchell v. Mitchell, 227 Va. 31, 36-37 (1984), recounts the history. In 1937 the Supreme Court held that the governing Code section made personal service on the non-resident merely the equivalent of service under an order of publication, but the Court acknowledged that such service had the advantage and benefit of providing actual knowledge of the claim to the defendant, which he might well not receive from mere publication in a local newspaper. Light v. City of Danville, 268 Va. 181 (1937). See also Cranford v. Hubbard, 208 Va. 689, 160 S.E.2d 760 (1968). More recently, the Supreme Court noted that "jurisdiction over nonresidents ha[s] changed considerably since 'the rigid rule of Pennoyer v. Neff'". John G. Kolbe, Inc. v. Chromodern Chair Co., 211 Va. 736, 180 S.E.2d 664 (1977). But for 50 years after International Shoe the Virginia Code retained limitations based on outdated presumptions about whether a nonresident ever might have contacts with the forum sufficient to warrant personal jurisdiction. In 1996 the editor of these Materials proposed legislation to remedy this limitation. In response, the restriction on the effect of out-of-state personal service, which had been embodied in Code § 8.01-320, was abrogated in 1997 by the General Assembly, which amended that Code provision to provide that in cases where a basis for long arm

- 309 - jurisdiction exists, personal service upon a non-resident outside the Commonwealth will have the same effect as personal service within Virginia. Thus a party wishing to achieve the certainty and speed of direct manual delivery may use that means of service without fear that the resulting power over the non-resident defendant will be limited to the value of in-state property or any other "res". Virginia Code § 8.01-320 today provides as follows: § 8.01-320 Personal service outside of Virginia A. Subject to § 8.01-286.1, service of a process on a nonresident person outside the Commonwealth may be made by: (i) any person authorized to serve process in the jurisdiction where the party to be served is located; or (ii) any person 18 years of age or older who is not a party or otherwise interested in the subject matter of the controversy and notwithstanding any other provision of law to the contrary, such person need not be authorized by the circuit court to serve process which commences divorce or annulment actions. When the court can exercise jurisdiction over the nonresident pursuant to § 8.01-328.1, such service shall have the same effect as personal service on the nonresident within Virginia. Such service when no jurisdiction can be exercised pursuant to § 8.01-328.1, or service in accordance with the provisions of subdivision 2 a of § 8.01-296 shall have the same effect, and no other, as an order of publication duly executed, or the publication of a copy of process under this chapter, as the case may be; however, depositions may be taken at any time after 21 days' notice of the taking of the depositions has been personally served. The person so served shall be in default upon his failure to file a pleading in response to original process within 21 days after such service. If no responsive pleading is filed within the time allowed by law, the case may proceed without service of any additional pleadings, including the notice of the taking of depositions.

It appears that the statute allows one to choose, in serving a non-resident, between using the mail provisions of the Virginia Long Arm statute, or serving the non-resident personally. So long as there is a basis for long arm jurisdiction, the service will be sufficient to provide in personam power over the defendant. Note, however, the limitation in this statute, which is carried forward from decades of prior versions of § 8.01-320, that service “in accordance with the provisions of subdivision 2 a of § 8.01-296 shall have the same effect, and no other, as an order of publication duly executed.” Can this possibly mean what it says? Code § 8.01-296(2)(a) is the provision for leaving the process at the defendant’s home with a member of the family who lives there (not a temporary sojourner or guest) who is sixteen years of age or older. If the 1997 amendment to § 8.01-320 abrogated the in rem limitation for jurisdiction over nonresidents, is it possible that the remaining limit on abode service merely means that a person so served has the same options provided to those served by publication to come in after the fact and seek to have the judgment set aside?

- 310 - J. "Presence" and "General Jurisdiction"

Introduction to General Jurisdiction Traditionally, in Virginia and elsewhere, a defendant who is served in the forum is subject to personal jurisdiction, whether the cause of action arises here or in a foreign location. From the time of Pennoyer v. Neff, 85 U.S. 714 (1878), as reaffirmed as recently as 1990 in Burnham v. , 495 U.S. 604 (1990), such service, even upon a transiently present person, has been held sufficient for full in personam jurisdiction. Along with consent, personal service in the forum continues to afford a fully satisfactory basis for assertion of jurisdiction. Entities such as corporations are deemed to be "present" and hence subject to personal jurisdiction in their state of incorporation and their state of principal place of business. Beyond those two possible forums, however, an entity is also subject to personal jurisdiction in any state where it is constitutionally "present" by virtue of its conduct of substantial, continuous business activities. In modern times, it often happens that a company is actively engaged in business in states other than the one in which it is incorporated or where it has its principal place of business. Where the business conducted is significant (e.g., General Motors -- incorporated in Delaware and with a principal place of business in Michigan -- operating an automobile production plant in New Jersey, employing several thousand people, owning millions of dollars of real estate, and conducting business generating substantial revenues each year) the entity is "present" for all purposes, and may be served and subjected to personal jurisdiction for any cause of action. The Supreme Court of Virginia summarized and applied this rule, in the following case.

WITT v. REYNOLDS METALS COMPANY 240 Va. 452, 397 S.E.2d 873 (1990)

JUSTICE LACY delivered the opinion of the Court. In this case we must determine whether the trial court properly dismissed the motion for judgment on the basis of lack of jurisdiction. Jerry L. Witt was injured as a result of an accident involving a trailer containing heavy aluminum. The trailer had been loaded by employees of the Reynolds Metals Company, the Alloys Plant (Reynolds), in Sheffield, . The accident occurred near Red Bay, Alabama. Witt, a resident of Henry County, Virginia, filed this negligence action in the Circuit Court of Henry County, alleging that Reynolds was a foreign corporation doing business in Virginia. Process was served on Reynolds' registered agent in Henrico County. Reynolds filed a motion to dismiss for lack of personal jurisdiction. After submission of briefs and argument of counsel, the trial court granted Reynolds' motion. Witt appealed.

- 311 - Reynolds concedes that it is amenable to service of process in this state and does not challenge the sufficiency of process served on its registered agent in this case. Reynolds argues, however, that amenability to service "does not automatically confer jurisdiction." Reynolds submits that "whether jurisdiction exists herein depends upon concepts of 'fairness' and 'convenience' and not upon mere compliance with procedural requirements of notice, nor even corporate 'presence.'" Reynolds asserts that because Witt's cause of action is not based on any act arising out of Reynolds' business transactions, activities, or presence in Virginia, there is no rational nexus between Virginia and Witt's claim. Therefore, Reynolds asserts, the trial court properly dismissed the action. The exercise of in personam jurisdiction over a non-resident defendant must comply with the due process requirements of the Fourteenth Amendment to the United States Constitution. Subjecting a non-resident defendant to the binding judgments of the forum court must "not offend 'traditional notions of fair play and substantial justice.'" International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945). Furthermore, the contacts of the defendant with the forum state must be such as to make it reasonable to require a defense in the forum state. Id. at 317. The circumstances of each case must be examined to determine whether the requisite contacts are present. Kulko v. Superior Court, 436 U.S. 84, 92 (1978). The requirement of a "nexus" between the in-state conduct of a defendant and the cause of action, which Reynolds contends applies in all situations, is not applicable, for example, when a defendant is a resident of the Commonwealth but commits actionable conduct elsewhere. The requirement does apply under the express terms of the long- arm statute (Code § 8.01-328.1), where "minimum contacts" measured in isolated transactions are sufficient to confer jurisdiction only with respect to causes of action arising out of that minimal activity in the forum. But the long-arm statute does not address the doctrine of general jurisdiction arising out of significant presence of a party in Virginia, and the parties agree that the long-arm statute is not applicable in the present case. Prior to International Shoe and the advent of long-arm legislation, the New York Court of Appeals, in a seminal decision, held that when a corporation is present in the forum by engaging in substantial, on-going business, it is sufficiently present to warrant assertion of personal jurisdiction over the entity. The court held further that "the jurisdiction does not fail because the cause of action sued upon has no relation in its origin to the business here transacted." Tauza v. Susquehanna Coal Co., 220 N.Y. 259, 268, 115 N.E. 915, 918 (1917). International Shoe thereafter expressly recognized that "continuous corporate operations within a state" may be "so substantial and of such a nature as to justify suit against [the corporation] on causes of action arising from dealings entirely distinct from those activities." 326 U.S. at 318. A foreign corporation, then, which has its principal place of business in the forum, or otherwise engages in a persistent course of systematic and substantial business activities in the forum state may be subjected to personal jurisdiction there. Perkins v. Benguet Consol.

- 312 - Mining Co., 342 U.S. 437 (1952). Reynolds relies principally upon Ratliff v. Cooper Laboratories, Inc., 444 F.2d 745 (4th Cir. 1971). That decision, however, makes no reference whatever to Virginia jurisdictional principles, and largely reflects abusive .16 In Ratliff, the defendants' only business connection with was the occasional promotional activities of five sales personnel; the defendants had no offices, factories, warehouses or other facilities in the state and were not listed in any directories there. Id. The Fourth Circuit found that requiring the out-of-state defendants to defend in South Carolina on those facts was inappropriate. Id. At the same time, however, the court expressly acknowledged that courts may assert general jurisdiction over persons who do conduct significant business in a forum, stating: If the plaintiff has some attachment to the forum, or if the defendant has adopted the state as one of its major places of business, we would have no question of the right of the state to subject the defendant to suit for unconnected causes of action. Nor would we even if the forum were not a major center of defendant's business but were nevertheless a community into whose business life the defendant had significantly entered as determined by the quality, substantiality, continuity and systematic nature of its activities . . . . Id. at 748. In contrast to its position on appeal, Reynolds did not dispute in the trial court the fact that it regularly and systematically does business in Virginia as well as in Alabama. Reynolds contends, however, that Alabama is the "proper situs for litigation of this claim," in light of the availability of witnesses and access to other evidence. While these are appropriate issues for consideration in applying the forum non conveniens doctrine, they are not the measure of personal jurisdiction, which turns upon the fundamental fairness notions of the due process clause. It was the assertion of personal jurisdiction which Reynolds challenged in the trial court. The trial court was not asked to rule on a motion to transfer for convenience, and it did not base its refusal to exercise personal jurisdiction on discretionary grounds. We find that the requirements of the due process clause are not violated by subjecting Reynolds to personal jurisdiction in the Circuit Court of Henry County on a cause of action arising out of events unrelated to the business conducted in the Commonwealth. Therefore, the trial court's judgment will be reversed and the case remanded for further proceedings.

16 The facts showed blatant forum shopping. "Plaintiffs' only interest in South Carolina is in its relatively long statute of limitations (six years), and plaintiffs' only contact with South Carolina is the bringing of these lawsuits for the sole purpose of availing themselves of that statute the limitation period having run in all other states having any connection with the claims presented ...." Id. at 746. The court further stated that the outcome might well have been different in a case where "the plaintiff has some attachment to the forum." Id. at 748.

- 313 - Note on Applying General Jurisdiction Concepts

More on "General Jurisdiction." International Shoe expressly recognized that "continuous corporate operations within a state" may be "so substantial and of such a nature as to justify suit against it on causes of action arising from dealings entirely distinct from those activities." 326 U.S. at 318. In Perkins v. Benguet Consolidated Mining Co., 342 U.S. 437 (1952)[cited by Justice Lacy in Witt] the United States Supreme Court examined just such a case. Benguet was a company incorporated and operating in the Philippines, but during World War II its president moved to Ohio and conducted "a continuous and systematic, but limited, part of its general business" in Ohio. Id. at 438. Perkins sued Benguet in Ohio for causes of action arising wholly outside Ohio. The Ohio courts thought that the due process clause precluded personal jurisdiction over Benguet for claims arising in the Philippines, but the Supreme Court reversed. While the Court did not find that Ohio had an obligation to provide a forum for Perkins to redress claims arising out-of-state, the court considered "whether as a matter of federal due process, the business done in Ohio by the respondent mining company was sufficiently substantial and of such a nature as to permit Ohio to entertain a cause of action against a foreign corporation, where the cause of action arose from activities entirely distinct from its activities in Ohio. Id. at 447 (emphasis in original). Applying International Shoe, the Supreme Court evaluated Benguet's forum activities (unrelated to the grounds for the lawsuit), finding that the officer located in the state "carried on in Ohio a continuous and systematic supervision of the necessarily limited wartime activities of the company." Id. at 448. The Court then concluded that due process would permit Ohio to exercise personal jurisdiction over the corporation for the claim arising outside the state. Id. The doctrine that substantial, continuous business activity in the forum is sufficient to permit general assertion of personal jurisdiction over a defendant was recognized again by the United States Supreme Court in Helicopteros Nacionales de Colombia v. Hall, 466 U.S. 408 (1984)(preserving Perkins); see also Waits, Values, Intuitions, and Opinion Writing: the Judicial Process and State Court Jurisdiction, 1983 Ill. L. Rev. 917, 940 ("If the primary purpose of jurisdiction is to protect defendants from unfair litigation burdens, it is probably not oppressive for a defendant to be sued in a state where the defendant conducts highly regularized activities, even if those activities are unrelated to the plaintiff's particular claim"); see A. Leflar, American Conflicts Law 52 (3d Ed. 1977)("The substantial character of corporate activities in the state indicates that the corporation is reasonably equipped to defend lawsuits there").

- 314 - K. "Waiver" of Service of Process

Mechanics of Waiver of Service. In 2005 the General Assembly passed a bar- sponsored initiative to implement a formal process for waiver of service of process, based loosely on the federal procedures under Rule 4. The new mechanism, codified in § 8.01-286.1 deals with a variety of topics, from basic service of process, to waiver, a "duty to save costs," the process for requests to waive more formal service, and how waiver is achieved. Code § 8.01-286.1(A). z Notice. Under the current procedure, in any action pending in circuit court, the plaintiff may notify a defendant of the commencement of the action and request that the defendant waive service of process. The statute provides the notice and request must be in writing addressed directly to the defendant, if an individual, or else to an officer, director or registered agent authorized by appointment or law to receive service of process of a defendant subject to service under § 8.01-299, §§ 8.01-301 through 8.01- 306 or § 8.01-320. The notice must be dispatched through first-class mail "or other reliable means." Code § 8.01-286.1(B). z Copy of the Complaint – Date Information.. The notice mailing must also be accompanied by a copy of the complaint, or other such initial pleading and identify the court in which it has been filed. It must inform the defendant, by means of a form provided by Executive Secretary of the Supreme Court, of the consequences of compliance and failure to comply with the request. The notice must recite the date on which the request itself is being sent, and then allow the defendant a reasonable time to return the waiver, which must be no more than 30 days from the date on which the request is sent, or 60 days from that date if the defendant's address is outside the Commonwealth. To facilitate response, the notice package must provide the defendant with an extra copy of the notice and request, as well as a prepaid means of returning an executed copy if the defendant agrees to do so. Code § 8.01-286.1(B). z Purported Duty to Play Along. The Code provision states that any person subject to service as set forth in § 8.01-296, 8.01-299, §§ 8.01-301 through 8.01-306 or § 8.01-320, with the exception of the Secretary of the Commonwealth and the Clerk of the State Corporation Commission, who receives actual notice of an action in the manner provided in this section, has a duty to avoid any unnecessary costs of serving process. Code § 8.01-286.1(A). z Cost-Transfers – But How Much Can if Be? To put teeth in that aspiration, the Code provision states that if a defendant fails to comply with a request for waiver made by a plaintiff, the court "shall impose the costs subsequently incurred in effecting service on the defendant unless good cause for the failure is shown." The amount of this cost-transfer is not likely to be much in Virginia, but the effort is to signal and convince prospective defendants to accept this mechanism where possible. Code § 8.01-286.1(B). The award is to include the costs subsequently incurred in effecting service under § 8.01-299, §§ 8.01-301 through 8.01-306 or § 8.01-320, "together with the costs, including reasonable attorneys' fees, of any motion required to collect the costs of service." This penalty provision will not apply to the Commissioner of the Department of Motor Vehicles, the Secretary of the Commonwealth or the Clerk of the State Corporation Commission. Code § 8.01-286.1(E).

- 315 - z Extended Response Time for Cooperative Defendants. Under the waiver procedure, which is merely an alternative for plaintiffs to the normal and still-viable service mechanisms in Virginia, a defendant who, before being served with process, timely returns a waiver so requested is not required to serve a grounds of defense or other responsive pleading to the complaint or other initial pleading until 60 days after the date on which the request for waiver of service was sent, or 90 days after that date if the defendant's address was outside the Commonwealth. Code § 8.01-286.1(B) and (C). Theoretically this "extra time" beyond the normally much shorter period for filing an answering pleading is another incentive for a defendant to comply with the notice and waiver alternative to more formal service mechanisms. Also, it is a recognition that unrepresented defendants are being asked to sign legally operative documents and that time may be required to retain and work with counsel before pleading to the merits should be required. z Under the waiver procedure, when the plaintiff files a waiver of service with the court, the action will proceed as if a notice and complaint or other initial pleading had been served at the time of filing the waiver, and no proof of service shall be required. Code § 8.01¬286.1(D). Preservation of Jurisdictional Defenses, Challenges to Process, or Venue Arguments. Following the model of the federal provisions on which this Virginia statute was based, a defendant who waives service of process pursuant to this section "does not thereby waive any objection to the venue or to the jurisdiction of the court over the person of that defendant, or to any other defense or objection other than objections based on inadequacy of process or service of process." Code § 8.01-286.1(F).

- 316 - L. Long-Arm Statute.

Summary In what practicing lawyers and judges refer to as the "long arm statute" (§§ 8.01- 328 through -330) the Legislature has enabled Virginia courts to assert personal jurisdiction over defendants who reside outside her borders. The constitutionality of the statute is reflected in the long line of United States Supreme Court decisions construing the Due Process aspects of personal jurisdiction, and "minimum contacts" doctrine studied in the regular first year course on civil procedure. The statute (§ 8.01-328.1) authorizes the exercise of personal jurisdiction for suits arising out of any of the following circumstances: 1. Transacting any business in Virginia. Thus Virginia is a "single act" jurisdiction, leaving principally the question whether specific types of conduct are sufficient. An example: sending four kitchen chairs from California into Virginia on order. 2. Contracting to supply services or things in Virginia. (A)(2). Read broadly. 3. Causing tortious injury anywhere by an act or omission in this state. (A)(3). 4. Causing tortious injury in Virginia by act or omission outside (A)(4) . This predicate supports jurisdiction if (a) defendant regularly does or solicits business in Virginia, or (b) engages in other persistent conduct in Virginia, or (c) derives "substantial revenue" from goods used or services rendered in Virginia. 5. Product Liability (A)(5). This basis for jurisdiction also allows for assertion of jurisdiction for injuries in Virginia after manufacture and sale of the product elsewhere, where defendant might reasonably have expected the plaintiff to use the product here. The requirements are similar to those above: Defendant must regularly conduct business in Virginia, engage in other persistent course of conduct here, or derive "substantial revenue" from goods used or services rendered in Virginia. 6. Real property in Virginia: (A)(.6) Where jurisdiction arises in connection with the ownership of property in this state the court's power is in personam. The limit of what is an interest in property may be found in Carmichael v. Snyder, 209 Va. 451, 164 S.E.2d 703 (1968), where a defendant was held subject to jurisdiction in Virginia after having contracted here with plaintiff for the purchase real estate, defendant defaulted and moved out of state, plaintiff sold the real estate and sued for the deficiency. 7. Contracting to insure Virginia persons, things, or risks; (A)(7) 8. Violation of Support Orders or Agreements. (A)(8) 9. Having maintained matrimonial in Virginia. (A)(9) This ground applies when one party is a resident and a matrimonial domicile existed at the time of separation, when the cause of action for divorce or separate maintenance arose, or when suit was commenced. 10. Personal Property Tax. If the person lived here when the tax was imposed, and has since left. (A)(10). 11. Paternity (A)(8)[iii])

- 317 - When a basis for long arm jurisdiction is present, service may be accomplished in several ways: „ under any other applicable statute giving personal jurisdiction over non- residents. (For foreign corporations, see §§ 8.01-307 through -313; § 8.01¬301). „ by delivery to defendant's agent in Virginia at the agent's residence. „ by delivery to the Secretary of the Commonwealth. The Secretary then mails notice to the last known post-office address of defendant. Service of process on the secretary is deemed effective on the date the secretary files a certificate of compliance with the court. See § 8.01-329(C). Note that service of process for most portions of the long-arm statute will be by delivery to the Secretary of the Commonwealth for mailing. The provisions of § 8.01- 328.1(8)(iii) and (9), however, dealing with certain marital and paternity actions, require personal service upon the defendant. The terms of the statute authorizing long-arm jurisdiction must be strictly followed or service will be invalid and any default judgment based on it will be void. Khatchi v. Landmark Restaurant Ass. Inc., section B above. On the other hand, § 8.01-330 expressly provides that a court of this State may exercise jurisdiction on any other basis authorized by law. Causes of Action. Under § 8.01-328.1(B), where jurisdiction is based solely on the long arm statute, only causes of action arising from acts conferring jurisdiction as enumerated in long-arm statute may be asserted. The long arm statute reads as follows: § 8.01-328.1. When personal jurisdiction over person may be exercised. A. A court may exercise personal jurisdiction over a person, who acts directly or by an agent, as to a cause of action arising from the person's: 1. Transacting any business in this Commonwealth; 2. Contracting to supply services or things in this Commonwealth; 3. Causing tortious injury by an act or omission in this Commonwealth; 4. Causing tortious injury in this Commonwealth by an act or omission outside this Commonwealth if he regularly does or solicits business, or engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered, in this Commonwealth; 5. Causing injury in this Commonwealth to any person by breach of warranty expressly or impliedly made in the sale of goods outside this Commonwealth when he might reasonably have expected such person to use, consume, or be affected by the goods in this Commonwealth, provided that he also regularly does or solicits business, or engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered in this Commonwealth; 6. Having an interest in, using, or possessing real property in this Commonwealth; 7. Contracting to insure any person, property, or risk located within this Commonwealth at the time of contracting;

- 318 - 8. Having (i) executed an agreement in this Commonwealth which obligates the person to pay spousal support or child support to a domiciliary of this Commonwealth, or to a person who has satisfied the residency requirements in suits for annulments or divorce for members of the armed forces pursuant to § 20-97 provided proof of service of process on a nonresident party is made by a law-enforcement officer or other person authorized to serve process in the jurisdiction where the nonresident party is located, (ii) been ordered to pay spousal support or child support pursuant to an order entered by any court of competent jurisdiction in this Commonwealth having in personam jurisdiction over such person, or (iii) shown by personal conduct in this Commonwealth, as alleged by affidavit, that the person conceived or fathered a child in this Commonwealth; or 9. Having maintained within this Commonwealth a matrimonial domicile at the time of separation of the parties upon which grounds for divorce or separate maintenance is based, or at the time a cause of action arose for divorce or separate maintenance or at the time of commencement of such suit, if the other party to the matrimonial relationship resides herein; or 10. Having incurred a tangible personal property tax liability to any political subdivision of the Commonwealth. Jurisdiction in subdivision 9 is valid only upon proof of service of process pursuant to § 8.01-296 on the nonresident party by a person authorized under the provisions of § 8.01-320. Jurisdiction under subdivision 8 (iii) of this subsection is valid only upon proof of personal service on a nonresident pursuant to § 8.01-320. B. Using a computer or computer network located in the Commonwealth shall constitute an act in the Commonwealth. For purposes of this subsection, "use" and "computer network" shall have the same meanings as those contained in § 18.2-152.2. C. When jurisdiction over a person is based solely upon this section, only a cause of action arising from acts enumerated in this section may be asserted against him; however, nothing contained in this chapter shall limit, restrict or otherwise affect the jurisdiction of any court of this Commonwealth over foreign corporations which are subject to service of process pursuant to the provisions of any other statute.

Service of Process using the Long Arm Provision. The Code provides in the following section for a simplified means of serving process on nonresidents for whom there is a basis for long-arm assertion of personal jurisdiction. The statute is used frequently and is important:

§ 8.01-329. Service of process or notice; service on Secretary of Commonwealth. A. When the exercise of personal jurisdiction is authorized by this chapter, service of process or notice may be made in the same manner as is provided for in Chapter 8 (§ 8.01-285 et seq.) of this title in any other case in which personal jurisdiction is exercised over such a party, or process or notice may be served on any agent of such person in the county or city in this Commonwealth

- 319 - in which that agent resides or on the Secretary of the Commonwealth of Virginia, hereinafter referred to in this section as the "Secretary," who, for this purpose, shall be deemed to be the statutory agent of such person. B. When service is to be made on the Secretary, the party or his agent or attorney seeking service shall file an affidavit with the court, stating either (i) that the person to be served is a nonresident or (ii) that, after exercising due diligence, the party seeking service has been unable to locate the person to be served. In either case, such affidavit shall set forth the last known address of the person to be served. For the mailing, by the clerk to the party or his agent or attorney, in accordance with subsection C, of verification of the effective date of service of process, the person filing an affidavit may leave a self- addressed, stamped envelope with the clerk. When the person to be served is a resident, the signature of an attorney, party or agent of the person seeking service on such affidavit shall constitute a certificate by him that process has been delivered to the sheriff or to a disinterested person as permitted by § 8.01-293 for execution and, if the sheriff or disinterested person was unable to execute such service, that the person seeking service has made a bona fide attempt to determine the actual place of abode or location of the person to be served. C. Service of such process or notice on the Secretary shall be made by the plaintiff's, his agent's or the sheriff's leaving a copy of the process or notice, together with a copy of the affidavit called for in subsection B hereof and the fee prescribed in § 2.2-409 in the office of the Secretary in the City of Richmond, Virginia. Service of process or notice on the Secretary may be made by mail if such service otherwise meets the requirements of this section. Such service shall be sufficient upon the person to be served, provided that notice of such service, a copy of the process or notice, and a copy of the affidavit are forthwith mailed by certified mail, return receipt requested, by the Secretary to the person or persons to be served at the last known post-office address of such person, and a certificate of compliance herewith by the Secretary or someone designated by him for that purpose and having knowledge of such compliance, shall be forthwith filed with the papers in the action. Service of process or notice on the Secretary shall be effective on the date the certificate of compliance is filed with the court in which the action is pending. Upon receipt of the certificate of compliance, the clerk of the court shall mail verification of the date the certificate of compliance was filed with the court to the person who filed the affidavit required by subsection B hereof, in the self-addressed, stamped envelope, if any, provided to the clerk at the time of filing of the affidavit. The clerk shall not be required to mail verification unless the self-addressed, stamped envelope has been provided. D. Service of process in actions brought on a warrant or motion for judgment pursuant to § 16.1-79 or § 16.1-81 shall be void and of no effect when such service of process is received by the Secretary within ten days of any return day set by the warrant. In such cases, the Secretary shall return the process or notice, the copy of the affidavit, and the prescribed fee to the plaintiff or his agent. A copy of the notice of the rejection shall be sent to the clerk of the court in which the action was filed. E. The Secretary shall maintain a record of each notice of service sent to a person for a period of two years. The record maintained by the Secretary shall

- 320 - include the name of the plaintiff or the person seeking service, the name of the person to be served, the date service was received by the Secretary, the date notice of service was forwarded to the person to be served, and the date the certificate of compliance was sent by the Secretary to the appropriate court. The Secretary shall not be required to maintain any other records pursuant to this section.

M. Personal Jurisdiction Standards Applied in Virginia

The Due Process Component and Minimum Contacts

ORCHARD MANAGEMENT COMPANY v. SOTO 250 Va. 343, 463 S.E.2d 839 (1995) [The Court has articulated "standard" personal jurisdiction concepts, as follows:] Due process requires that "in order to subject a defendant to a judgment in personam, if he be not present within the territory of the forum, he have certain minimum contacts with it such that the maintenance of the suit does not offend 'traditional notions of fair play and substantial justice.'" International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) (quoting Milliken v. Meyer, 311 U.S. 457, 463 (1940)). "An essential criterion in all cases is whether the 'quality and nature' of the defendant's activity is such that it is 'reasonable' and 'fair' to require him to conduct his defense in [the forum] State." Kulko v. California Superior Court, 436 U.S. 84, 92 (1978). In determining whether the quality and nature of a defendant's activity make it reasonable and fair to require him to conduct his defense in the forum state, "it is essential in each case that there be some act by which the defendant purposefully avails [himself] of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws." Hanson v. Denckla, 357 U.S. 235, 253 (1958). It is sufficient if "the defendant's conduct and connection with the forum State are such that he should reasonably anticipate being haled into court there." World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980). And the minimum contact requirement is more readily satisfied when, as here, "the litigation results from alleged injuries that 'arise out of or relate to'" a defendant's contacts with the forum state. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 (1985) (quoting Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414 (1984)). . . . The activities defendants . . . engendered were more than sufficient to satisfy the basic minimum contacts criteria of International Shoe Co. . . . These purposeful acts were undertaken with certain awareness that job offers would be disseminated and acted upon in Puerto Rico. They availed themselves of recruitment, screening and logistical services created under Puerto Rican laws and performed by [Puerto Rican] employees. The conclusion is, therefore, inescapable that defendants purposefully and knowingly availed themselves of the benefits and protections established by Puerto Rican law. . . .

- 321 - Here, consonant with Hanson v. Denckla, there existed an "act by which [the Growers] purposefully avail[ed themselves] of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws," 357 U.S. at 253; consonant with World-Wide Volkswagen Corp. v. Woodson, the Growers' "conduct and connection with the forum State [were] such that [they] should reasonably [have] anticipated being haled into court there," 444 U.S. at 297; and consonant with Burger King Corp. v. Rudzewicz, "the litigation results from alleged injuries that 'arise out of or relate to'" the Growers' contacts with the forum state, 471 U.S. at 472. Hence, consonant with International Shoe Co. v. Washington, the Growers had "certain minimum contacts with [Puerto Rico] such that the maintenance of the [Workers' suits] does not offend 'traditional notions of fair play and substantial justice,'" 326 U.S. at 316. . . . . When full faith and credit is sought for a judgment rendered by a court of general jurisdiction of another state, that court's jurisdiction over the cause and the parties is presumed unless disproved by extrinsic evidence or the record itself, Adam v. Saenger, 303 U.S. 59, 62 (1938), and the burden is upon the party challenging the judgment to establish the lack of jurisdiction, Bloodworth v. Ellis, 221 Va. at 24, 267 S.E.2d at 100. Here, the record itself does not disprove jurisdiction of the Puerto Rican courts, and the Growers have failed to carry their burden of establishing the lack of jurisdiction by extrinsic evidence. Accordingly, the presumption prevails, and we will affirm the judgment of the trial court, giving full faith and credit to the Puerto Rican default judgments. Affirmed. [Editor’s Note: principles similar to those recited in the preceding case are set forth in Peninsula Cruise, Inc. v. New River Yacht Sales, Inc., 257 Va. 315, 512 S.E.2d 560 (1999).]

- 322 - Applying Contacts and The Virginia Long Arm Statute

JOHN G. KOLBE, INC. v. CHROMODERN CHAIR CO. 211 Va. 736, 180 S.E.2d 664 (1977)

[A "manufacturer's sales representative" obtained, in Richmond, an order for 150 chairs.] The sole question presented by Kolbe's assignment of error is whether Chromodern was "Transacting any business in this State" within the meaning of Code § 8-81.2(a)(1), so as to subject it to the jurisdiction of the courts of Virginia "as to a cause of action arising" from such activity. The evidence shows that Chromodern, whose administrative offices are located in Vernon, California, is a manufacturer of commercial chairs, tables and related items. Kolbe, a dealer in restaurant equipment, is located in Richmond, Virginia. [Defendant's witness] Minkel stated in his deposition that "No [Chromodern] representative has been designated [in Virginia]. There have been preliminary discussions from time to time, but that is as far as it has gone." He said MacDonald contacted him by telephone on October 8 and advised him that he could obtain an order for 150 chairs, and he accepted MacDonald's verbal order. MacDonald told him he would get a confirming order from Kolbe. Minkel further testified that it was Chromodern's normal business practice to require a written order before processing any merchandise and to formally accept the order by a written acknowledgement only after the dealer's credit had been approved. No telephone, office facility or inventory was ever maintained by Chromodern in Virginia, nor did any officer, director or employee visit Virginia. The development of the doctrine extending jurisdiction in personam over nonresidents beyond the requirement of physical presence to include actions arising out of certain activities within the forum State was set forth by the Supreme Court of the United States in International Shoe Co. v. Washington, 326 U.S. 310, (1945); and McGee v. International Life Ins. Co., 355 U.S. 220, (1957). Cf. Hanson v. Denckla, 357 U.S. 235, (1958). In International Shoe the Court held that in order to subject a foreign corporation to a judgment in personam, due process requires only that the corporation have "certain minimum contacts" within the territory of the forum, so that the maintenance of the action does not offend traditional notions of fair play and substantial justice. The Court said: [To] the extent that a corporation exercises the privilege of conducting activities within a state, it enjoys the benefits and protection of the laws of that state. The exercise of that privilege may give rise to obligations, and, so far as those obligations arise out of or are connected with the activities within the state, a procedure which requires the corporation to respond to a suit brought to enforce them can, in most instances, hardly be said to be undue." 326 U.S. at 319. The doctrine of International Shoe was applied in McGee, supra. There the Court upheld the power of California to subject a foreign corporation to suit in its courts on

- 323 - the mere basis of an isolated insurance contract, "which had substantial connection with that State." 355 U.S. at 223, 226. In Hanson, supra, the Court noted that the requirements for personal jurisdiction over nonresidents had changed considerably since "the rigid rule of Pennoyer v. Neff" because of "progress in communications and transportation," but said that it would be "a mistake to assume that this trend heralds the eventual demise of all restrictions on the personal jurisdiction of state courts." 357 U.S. at 251. However, the only limitation put on the doctrine established in International Shoe, and followed in McGee, was that "it is essential in each case that there be some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws." 357 U.S. at 253. Encouraged by the broadened doctrine of personal jurisdiction over nonresident persons and corporations conducting activities within a state, the legislature of this State, in 1964, enacted . . . the "long arm statute." [W]ith the exception of sub-paragraph (5), it is modeled upon provisions of the Civil Practice Act and the Uniform Interstate and International Procedure Act. . . . [The long arm statute] vests the courts of this State with "personal jurisdiction over a person [which includes corporations] who acts directly or by an agent as to a cause of action arising from the person's (1) Transacting any business in this State." It is manifest that the purpose of Virginia's long arm statute is to assert jurisdiction over nonresidents who engage in some purposeful activity in this State to the extent permissible under the due process clause. Carmichael v. Snyder, 209 Va. at 456, 164 S.E.2d at 707. Since the statute provides "Transacting any business in this State" (emphasis added), it is a single act statute requiring only one transaction in Virginia to confer jurisdiction on its courts. See McGee, supra. [The Code] discarded the concept of "doing business" as the exclusive test of jurisdiction and provided instead, insofar as pertinent here, that personal jurisdiction may be asserted over a nonresident if, in person or through an agent, he transacts any business in this State. . . . Extensive research has failed to produce a situation similar to the facts in the present case. Moreover, the divergence of judicial opinions demonstrates that the holding in each case must rest upon an analysis of its own particular facts and circumstances. See Annotation: 27 A.L.R.3d 397 (1969), and the great number of cases there collected. Here the evidence clearly demonstrates that MacDonald acted under the authority and direction of Minkel in making the sale to and securing the purchase order from Kolbe, a Chromodern dealer in this State. Chromodern required a written order before it processed any merchandise, and it was the written order secured by MacDonald in Richmond which bound Kolbe in the transaction and placed upon it the financial responsibility for the purchase. Although the chairs were shipped to North Carolina as a convenience to Kolbe, they were sold to Kolbe on the basis of its credit and a written obligation secured in Virginia through MacDonald. It is clear that Chromodern through MacDonald voluntarily and purposefully availed itself of the privilege of conducting activities within Virginia which amounted to a substantial transaction of business in this State. Chromodern's actions, both in this transaction and on others shown by the evidence, delineate a pattern of activities

- 324 - intended to develop the Chromodern market in Virginia and to reap economic benefit therefrom. Since Chromodern has purposefully availed itself of the privilege of conducting business activities within Virginia and thereby invoked the benefits and protection of the laws of this State, it would not offend traditional notions of fair play and substantial justice to require it to submit to the jurisdiction of the courts of this State. For the reasons stated, the order of the court below dismissing the motion for judgment is set aside and the case is reinstated and remanded for further proceedings.

- 325 - Minimum Contacts Over the Internet

KRANTZ v. AIR LINE PILOTS ASSOCIATION 245 Va. 202, 427 S.E.2d 326 (1993)

JUSTICE WHITING delivered the opinion of the Court. In this action against two defendants for intentional interference with a prospective employment contract, we decide. . . whether one of the defendants, a nonresident, is subject to service of process under Code § 8.01-328.1 (the long-arm statute). . . Aron F. Krantz filed an action at law against Richard W. Nottke and Air Line Pilots Association, International (ALPA), a labor union, to recover damages for their intentional interference with his prospective contract as a pilot with United Airlines. Nottke, a resident of New York, who was served with process under the provisions of Code § 8.01-328.1(A)(3), filed a motion to dismiss on the ground that the court lacked jurisdiction over his person. Judge Thomas A. Fortkort sustained Nottke's motion. . . . Krantz, an airline pilot and ALPA member living in Vermont, participated in a strike against his employer, Eastern Airlines. However, Krantz later withdrew from the strike, applied for a job with United, and placed his name on the "recall" list at Eastern. Upon Krantz' withdrawal from the strike, ALPA placed his name on a "scab" list that contained the names of all Eastern pilots who did not support ALPA's strike at Eastern. The scab list was posted on various bulletin boards in a computer center electronic switchboard system (ACCESS) operated by ALPA from its offices in Herndon, Virginia. ACCESS is a closed computer communications system; ALPA members and staff with the necessary passwords are the only persons who could use ACCESS for communicating with ALPA members, broadcasting messages to various ALPA councils, and posting messages on various "bulletin boards and forums." ALPA controls the contents of any such messages and removes any messages it deems inappropriate. After a successful job interview with United, Krantz was given the impression that he would be hired, and United advised him that he would be called soon for a final interview. On September 15, 1989, the day after Krantz' initial interview, Nottke, an Eastern pilot and ALPA member, recorded a message derogatory to Krantz on Nottke's personal computer in New York. In an attempt to prevent Krantz' employment by United, Nottke advised his fellow union members at United and elsewhere of Krantz' interview at United and urged them to "PASS THE WORD" that Krantz had withdrawn from the strike and was a "scab." Nottke then transmitted his message electronically to ACCESS. As a result of the publication of Nottke's message and ALPA'S scab list, United received over 300 adverse comments about Krantz at its Flight Officer

- 326 - Employment Office in Denver, Colorado. Consequently, United terminated its negotiations with Krantz. The strike later ended on November 22, 1989. Some time after the strike ended, in further retaliation for the failure of Krantz and other Eastern pilots to support the strike against Eastern, ALPA sought to prevent their future employment as pilots by printing 50,000 copies of its final Eastern scab list or "blacklist" and distributing them to all airlines, air freight carriers, and pilot training organizations. As a result of ALPA's publication of this blacklist, Krantz has been unable to obtain employment as an airline pilot. Applicability of the Long-Arm Statute First, we consider whether Nottke is within the reach of Code § 8.01-328.1(A)(3), the long-arm statute. In doing so, we recognize that "the function of our long-arm statute is to assert jurisdiction over nonresidents who engage in some purposeful activity in Virginia, to the extent permissible under the Due Process Clause of the Constitution of the United States." Nan Ya Plastics Corp. v. DeSantis, 237 Va. 255, 259, 377 S.E.2d 388, 391 (1989). To resolve this issue, we first consider the elements of the asserted cause of action to determine the scope of the statute. The elements of a tortious interference with a contract are: (1) the existence of a valid contractual relationship or business expectancy; (2) knowledge of the relationship or expectancy on the part of the interferor; (3) intentional interference inducing or causing a breach or termination of the relationship or expectancy; and (4) resultant damage to the party whose relationship or expectancy has been disrupted. Chaves v. Johnson, 230 Va. 112, 120, 335 S.E.2d 97, 102 (1985). We are concerned with whether Nottke's activities in New York satisfied the third element of this tort. In support of his claim that he committed no act in Virginia that subjects him to Code § 8.01-328.1(A)(3), Nottke cites a number of cases in which fraudulent or defamatory statements were generated in a foreign state and transmitted by telephone or mail to the forum state. In those cases, the courts decided that such activities were not "acts" in the forum jurisdiction within the meaning of Code § 8.01-328.1(A)(3) or an identical statute of another jurisdiction. . . .In these cases, the nonresidents may have completed their tortious acts in the foreign jurisdictions, although the damage occurred in some other jurisdiction. We need not decide whether those courts correctly limited the applicable long-arm statutes because we are dealing with a communication that alone was not a tortious act; some further act was required in the forum state to complete Nottke's act of tortiously

- 327 - interfering with Krantz' prospective contract. Specifically, the entry of Nottke's message on his computer in New York was only the beginning of his plan to block Krantz' employment. To execute his plan, Nottke needed other persons to communicate his message to United, Krantz' prospective employer. He intended those persons to be fellow ALPA members, especially United pilots, who, at Nottke's request, would transmit negative comments about Krantz to United and thereby block Krantz' prospective employment. Without the use of ACCESS, a Virginia facility, Nottke could not have obtained those recruits, and there would have been no interference with Krantz' prospective contract, the third required element for a prima facie showing of this tort. Chaves, 230 Va. at 120, 335 S.E.2d at 102. Thus, Nottke's use of ACCESS in Virginia as a means of furthering his plan to block Krantz' employment was "an act . . . in this Commonwealth" within the meaning of Code § 8.01-328.1(A)(3). This brings us to the question whether our construction of Code § 8.01-328.1(A)(3) would offend "traditional notions of fair play and substantial justice." International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) (quoting Milliken v. Meyer, 311 U.S. 457, 463 (1940)). See Burger King Corp. v. Rudzewicz, 471 U.S. 462, 471-72 (1985). In our opinion, the facts alleged indicate that Nottke has engaged in a purposeful activity in Virginia, and has had the minimum contact necessary for Krantz to maintain his action in the Commonwealth. See Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 779 (1984) (transmitting libelous material into foreign state injuring nonresident plaintiff); Murphy v. Erwin-Wasey, Inc., 460 F.2d 661, 664 (1st Cir. 1972) (telephoning and mailing intentionally deceptive material from foreign jurisdiction into forum state). Accordingly, we hold that subjecting Nottke to the personal jurisdiction of a Virginia court does not offend "traditional notions of fair play and substantial justice." Therefore, we will reverse the trial court's dismissal of Nottke for lack of personal jurisdiction.

- 328 - Claims Arising from In-State Contacts and the Long-Arm Statute

GALLOP LEASING CORP. v. NATIONWIDE MUTUAL INS. 244 Va. 68, 418 S.E.2d 341 (1992)

JUSTICE STEPHENSON delivered the opinion of the Court. The sole issue in this appeal is whether the trial court erred in exercising personal jurisdiction over Gallop Leasing Corp. (Gallop) pursuant to Code § 8.01-328.1, the so- called "long-arm statute." Nationwide Mutual Insurance Company (Nationwide) filed a declaratory judgment proceeding against Gallop and others, seeking a declaration that a certain automobile liability insurance policy issued by Nationwide was void ab initio. Service of process on Gallop, a New York corporation, was made by service upon the Secretary of the Commonwealth pursuant to Code § 8.01-329. On September 21, 1990, the trial court granted Nationwide a default judgment against Gallop and others. Subsequently, Gallop moved to have the default judgment set aside, contending that the judgment is void because the court did not have personal jurisdiction over Gallop. After an ore tenus hearing, the trial court denied Gallop's motion to set aside the default judgment, concluding that the court's exercise of personal jurisdiction was proper under Code § 8.01-328.1. Gallop appeals. The appeal comes to us on an agreed statement of facts. Gallop is engaged in the business of providing financing for automobile leasing transactions. It has one office, located on Long Island, New York, with 10 employees. Gallop never has had any offices, agents, or employees in Virginia, nor has it conducted any business in Virginia. Gallop provided financing to Donovan E. Barham for purposes of leasing an automobile from and through an independent broker, Nick Polano. Polano was not an employee of Gallop. He received no wages or benefits from Gallop, and he did not have an office at Gallop. For his services, Gallop paid Polano a commission on each transaction that he closed. A Gallop officer, in his testimony, referred to Polano as both a broker and an agent. Polano brought the Barham transaction to Gallop and acted as an intermediary between the automobile dealership, Gallop, and Barham. Gallop never dealt directly with Barham. Polano maintained all contact with Barham and ensured that all of

- 329 - Gallop's requirements regarding insurance were met. Although Barham was responsible for providing his own insurance, Polano followed up to ensure that the financing would be approved by Gallop and that Polano would be paid his commission. On January 12, 1989, Barham personally appeared at a Nationwide office in Newport News and applied for insurance for the leased automobile through the Virginia Automobile Insurance Plan, better known as assigned risk insurance. On that day, William Ward, a Nationwide agent, issued a policy to Barham. During the initial meeting between the two men, Barham apparently made misrepresentations regarding his state of residence and place of employment, claiming that his residence and place of employment were in the City of Hampton, Virginia. When the policy was issued to Barham, Gallop was not listed as an additional insured, and the policy limits were below Gallop's requirements. Consequently, on January 17, 1989, Ward received a telephone call from a man identifying himself as "Nick" who stated that he was with Gallop. Nick informed Ward that the insurance policy issued to Barham was inadequate with respect to policy limits and instructed Ward to increase the limits. Nick also instructed Ward to add Gallop as an additional insured on the policy. Ward amended the policy to accord with Nick's instructions. Code § 8.01-328.1(A)(1) provides, inter alia, that "[a] court may exercise personal jurisdiction over a person, who acts directly or by an agent, as to a cause of action arising from the person's . . . transacting any business in this Commonwealth." Gallop contends that the trial court erred in exercising personal jurisdiction over Gallop because (1) Gallop did not transact any business in Virginia, (2) the cause of action did not arise from any conduct or activity by Gallop, and (3) Gallop had insufficient minimum contacts with Virginia to satisfy the requirements of due process. If Gallop is correct about any of these contentions, the trial court erred in exercising personal jurisdiction. Nationwide contends that all three requirements were satisfied, thereby clothing the trial court with personal jurisdiction over Gallop. We will assume, without deciding, that the individual identified as "Nick," who called Ward on the telephone, was Nick Polano; that Polano was acting as Gallop's agent; that the telephone call was sufficient to satisfy the "single transaction" test set forth in Kolbe, Inc. v. Chromodern Chair. . . . and, therefore, that Gallop did transact business in Virginia as contemplated in Code § 8.01328.1(A)(1). Having made these assumptions, we next consider Gallop's second contention, viz, that Nationwide's cause of action did not arise from any conduct or activity attributable to Gallop. As previously noted, Code § 8.01-328.1(A)(1) provides that a court may exercise personal jurisdiction over a person "as to a cause of action arising from" the person's transaction of business in Virginia. (Emphasis added.) Similarly, paragraph [C] of Code § 8.01-328.1 provides that "when jurisdiction over a person is based solely upon [§ 8.01-328.1], only a cause of action arising from acts enumerated in [that] section may be asserted against him." (Emphasis added.) In the declaratory judgment proceeding, Nationwide asked that the insurance policy be declared void ab initio because Barham allegedly made material misrepresentations about his state of residence and his place of employment. Gallop's acts in instructing Nationwide to amend the policy were not a basis for having the policy declared void. Thus, because Nationwide did not assert a cause of action arising from any acts of Gallop in Virginia, the trial court erred in exercising personal jurisdiction over Gallop.

- 330 - The conclusion we reach accords with the decisions of other courts that have addressed the issue. . . Accordingly, the trial court's judgment will be reversed, the default judgment against Gallop will be vacated and annulled, and the declaratory judgment proceeding will be dismissed.

Note on Payments Due in the Forum

Application to Agreements Where Payment in Virginia is Contracted-For. In Glumina Bank v. D.C. Diamond Corp., 259 Va. 312, 527 S.E.2d 775 (2000), the Court applied the standards noted in earlier cases on facts involving a contract obligating the non-resident "to transfer, deliver, and supply" to the plaintiff's bank account in Manassas a total of $460,000. The Supreme Court found that this qualified for long- arm jurisdiction under the Virginia Act because it was "contracting to supply services or things in this Commonwealth." In passing the Court approved as valid a procedure in which a second mailing was made by the Secretary of the Commonwealth to the defendant – at plaintiff's behest of course – to set up the hearing on the default judgment application. The Court called this "full compliance by the plaintiffs with each procedural requirement leading to the judgment by default."

- 331 -

Errors in the Long-Arm Mailing Process

Technical Errors. In O’Connell v. Bean, 263 Va. 176, 556 S.E.2d 741 (2002), the Supreme Court held that in using “long arm” service on a D.C. under Code § 8.01-329 it was a “material” error to fail to check a box on the pre-printed form affidavit for serving non-residents which would have stated that the service address of the defendant was the “last known address” for these purposes. Hence the affidavit, as actually executed, stated only that the defendant was a non-resident. That’s required, but it’s not enough said the Court. In another interesting aspect of the case, the Court remarked that the records of the Secretary of the Commonwealth did not establish that delivery was actually made to the defendant at her office of business, because the Secretary’s files did not retain the return receipt from the certified mail delivery. This appears to be the practice of the Secretary(!). This case also contains a comment that may indicate that the “savings” statute (providing that service that “gets through” is valid despite technical failures) may not be applicable in “long arm” and similar “substituted” service procedures. The Court said: “We have held that ‘where a defendant has received personal service of process, irregularity will not defeat the court's jurisdiction, but if a statute provides for constructive service, the terms of the statute authorizing it must be strictly followed or the service will be invalid and any default judgment based upon it will be void.’" (citing Khatchi). Where service errors like these take place, jurisdiction is lacking. In O’Connell, the Court set aside default judgments entered on the basis of the defective “long arm” service. Mailing Problems – Do They Even Matter? In Basile v. American Filter Service, 231 Va. 34, 340 S.E.2d 800 (1986), an employee of a pizza shop sued a non-resident company who had performed work on the premises, and made service by filing the proper papers with the Secretary of the Commonwealth, who thereafter duly certified that they were mailed to the non-resident. As often happens, a default judgment was entered for plaintiff because defendant never responded to the suit papers. The original process, and notice of the impending default proceeding, were sent to the defendant corporation at its P.O. Box No. 908 in Columbia, Maryland, but without a zip code. Plaintiff dug up evidence that there is only one P.O. Box 908 in Columbia, Maryland, which the Supreme Court found to establish that the delivery would have been made to the correct defendant. Perhaps more importantly, the Court announced that the filing in the Virginia trial court clerk's office of the Secretary of the Commonwealth's certificate makes service "complete and conclusive." Then the Court wrote: "there is no basis under § 8.01-329 for invalidating service on the statutory agent because of the defendant's failure to receive actual notice of the suit." And it rejected an appeal to "equitable considerations" as well.

- 332 - N. Completion of Service, Return and Non-Standard Service

General Principles Time for Completing Service. The General Assembly has fixed 72 hours as the standard period of time for the filing of returns of service, whether by the sheriff or any private process server. See Code § 8.01-294 (applying to sheriff service) and Code § 8.01-325 (same period for private process serving). If the deadline for filing proof of service falls on a weekend or holiday, it is extended to the next normal work day. Where the papers are served by a private process server, the return must contain a stamped, typed or printed annotation stating that the papers were served by a private process server, and setting forth the name, address and telephone number of the person effecting service, in accord with Code §8.01-325(2). Rule 3:6 provides a form for the averments of a return of service. No Harm – No Foul? Note that the General Assembly has specifically provided that failure to make return of service of process within the time specified in Code § 8.01-294 will not invalidate any service of process or any judgment based thereon. Instead, in the event a late return prejudices a party or interferes with the court's administration of a case, the court may, in its discretion, continue the case, require additional or substitute service of process, or take such other action or enter such order as the court deems appropriate under the circumstances. Not a "Verity," But Slack Cut for Sheriff Service. Code § 8.01-326 today provides that no return is "conclusive" – hence a defendant can always make a motion challenging the fact of service. However, that section goes on to say: "The return of a sheriff shall be prima facie evidence of the facts therein stated, and the return of a qualified individual under subdivision 2 of § 8.01-293 shall be evidence of the facts stated therein." This means that a plaintiff can sometimes avoid obtaining a subpoena for the person who completed service in the case of a sheriff, because the signed return paper establishes prima facie evidence that service was completed, and unless the defendant has sworn testimony to the contrary, the sheriff's deputy's presence would not be needed. In the case of a private process server, however, the required return paper does not have that statutorily-prescribed weight, and the plaintiff facing a motion challenging service will need to have the private process server appear in court to swear to the facts of service.

- 333 - The "One-Year Rule" for Completing Service of Process

GILBREATH v. BREWSTER 250 Va. 436, 463 S.E.2d 836 (1995)

JUSTICE LACY delivered the opinion of the Court: The primary issue in this appeal is whether the dismissal of an action pursuant to Supreme Court Rule [3:5(e)]17 for lack of timely service is with or without prejudice. The relevant facts are undisputed. On July 11, 1991, a traffic accident occurred involving two vehicles, one driven by Pamela J. Brewster and the other driven by Clarence C. Gilbreath, an employee of Wells Cargo, Inc. On July 9, 1993, Brewster and Victoria Ann Brann, a passenger in the Brewster vehicle, filed separate motions for judgment against Gilbreath and Wells Cargo alleging that Gilbreath's negligence caused the accident and seeking recovery for personal injuries allegedly sustained in the accident. Service was obtained on both defendants approximately 13 months after the actions were filed. Gilbreath and Wells Cargo (collectively "Gilbreath") filed responsive pleadings, asserted a counterclaim for property damage in the action filed by Brewster, and asserted a third-party claim for contribution against Brewster in the action filed by Brann. In addition, Gilbreath filed motions to dismiss in both cases for failure to effect service within one year after commencement of the action pursuant to 3:5(e). The trial court heard the two actions together. At the hearing on the motions to dismiss, Brewster and Brann requested nonsuits. The trial court determined that Brewster and Brann had not exercised due diligence in trying to effect service, but granted their motions for nonsuits. Gilbreath filed a motion for reconsideration, arguing that Brewster and Brann were not entitled to nonsuits as a matter of right under Code § 8.01-380 because Gilbreath's counterclaim and third-party claim could not be independently adjudicated. The trial court agreed and vacated the nonsuit orders. The trial court then granted Gilbreath's motions to dismiss pursuant to Rule 3:5(e) and entered orders dismissing the actions without prejudice. Gilbreath appealed the judgments, asserting that dismissal of an action pursuant to Rule 3:5(e) should be with prejudice. Brewster and Brann assigned cross-error asserting that they were entitled to nonsuit their actions and the trial court erred in vacating its orders granting the nonsuits. The cases were consolidated for appeal.

17 The current Rule number and language is substituted into this opinion and others in this portion of the Readings in order to avoid confusion. The former version of the Rule was 3:3, and it is now 3:5(e).

- 334 - Rule 3:5(e) provides in pertinent part: (e) Service more than one year after commencement of the action. No order, judgment or decree shall be entered against a defendant who was served with process more than one year after the institution of the action against that defendant unless the court finds as a fact that the plaintiff exercised due diligence to have timely service on that defendant. We have not previously addressed whether this Rule requires that dismissal be with prejudice when service on the defendant is not perfected within one year and the trial court finds a lack of due diligence by the plaintiff. Brewster and Brann (collectively "Brewster") argue that the dismissal under [this Rule] must be without prejudice for two reasons: (1) the dismissal is not based on the merits of the claim; and (2) a dismissal with prejudice would conflict with Code § 8.01-229(E)(1), and therefore, the statute must prevail. Clark v. Butler Aviation, 238 Va. 506, 511, 385 S.E.2d 847, 850 (1989). These arguments are not well taken, however. First, contrary to Brewster's assertion, not all dismissals terminating a cause of action without determining the merits are dismissals without prejudice. A dismissal based on a plea in bar, such as a plea of sovereign immunity, is a dismissal with prejudice. In these circumstances, the ability of a plaintiff to pursue a claim against the defendant is finally determined, although not on the merits of the plaintiff's claim against the defendant. Therefore, a dismissal under Rule 3:5(e) is not precluded from being a dismissal with prejudice even though the merits of the plaintiff's claim were not determined. We also reject Brewster's second premise, that a dismissal with prejudice conflicts with Code § 8.01-229(E)(1). That Code section contains tolling provisions which allow an action, previously terminated "without determining the merits," to avoid a second dismissal based on a plea of the statute of limitations. The statute applies, however, only when the claim can be refiled following a dismissal. It is the nature of the prior dismissal which determines whether the action remains viable. . . . A dismissal with prejudice generally is "as conclusive of the rights of the parties as if the suit had been prosecuted to a final disposition adverse to the plaintiff," and it not only terminates the particular action, "but also the right of action upon which it is based." Virginia Concrete Co. v. Board of Supervisors, 197 Va. 821, 825, 91 S.E.2d 415, 418 (1956). See also Reed v. Liverman, 250 Va. 97, 100, 458 S.E.2d 446, 447 (1995). For example, as discussed above, a dismissal with prejudice on the basis of a plea in bar, is conclusive as to the rights of those parties, even though the substantive claim of the plaintiff has not been litigated on the merits. Thus, for purposes of Code § 8.01-229(E)(1), a dismissal with prejudice is a determination on the merits. The claim in that situation is no longer viable and the plaintiff does not have a right to the tolling provisions of Code § 8.01-229(E)(1). A dismissal with prejudice affects only the viability of the claim, its ability to be litigated on the merits. Therefore, a dismissal with prejudice does not conflict with Code § 8.01-229(E)(1). Clark v. Butler, relied on by Brewster, does not affect the above analysis. Clark involved the interplay between Rule 3:5(e) and the nonsuit statutes. That statutory scheme is significantly different from the single statute under consideration here. In Clark, failure to comply with Rule 3:5(e) was raised in the first action, but a nonsuit was requested and granted. The claim was refiled and the Rule 3:5(3) violation in the

- 335 - first action was again asserted as a basis for dismissal. 238 Va. at 508, 385 S.E.2d at 847. This Court held that a violation of Rule 3:5(e) in the original action could not be used to bar prosecution of the refiled action and, therefore, no conflict existed between the Rule and the statutes in issue. Id. at 511-12, 385 S.E.2d at 849-50. Nothing in the holding of Clark suggests that a conflict would exist between a case terminated with prejudice, although not resolved on the merits, and Code § 8.01-229(E)(1). Having determined that the arguments presented by Brewster do not require that a dismissal under Rule 3:5(e) be without prejudice, we turn to our original consideration - - whether a dismissal under Rule 3:5(e) is with or without prejudice. The Rule itself is silent; however, to allow dismissal without prejudice renders the Rule ineffective. The purpose of Rule 3:5(e) is to provide for timely prosecution of lawsuits and to avoid abuse of the judicial system. If a dismissal under the Rule were without prejudice, a litigant could repeatedly file an action without serious attempt to serve the defendant. This practice clearly would be an abuse of the system. To sanction this abuse would be particularly offensive because dismissal under the Rule requires a determination that the plaintiff did not use due diligence in attempting to secure service on the defendant. A dismissal without prejudice under these circumstances would condone the plaintiff's lack of diligent prosecution. Furthermore, if dismissal under Rule 3:5(e) were without prejudice, the tolling provisions of Code § 8.01-229(E)(1) could be invoked, allowing repeated filings which effectively nullify the statute of limitations and potentially allow harassment of the defendant. See W. Hamilton Bryson, HANDBOOK ON VIRGINIA CIVIL PROCEDURE, at 99-100 (2d ed. 1989); Leigh B. Middleditch, Jr. & Kent Sinclair, VIRGINIA CIVIL PROCEDURE § 7.12, at 375-79 (2d ed. 1992). If a plaintiff who has suffered a dismissal for failure to comply with Rule 3:5(e) retains the right to refile the cause of action against the previously unserved defendant, both the purpose of Rule 3:5(e) and the statute of limitations are undermined. Accordingly, we conclude that a dismissal under Rule 3:5(e) is a dismissal with prejudice and the trial court erred in dismissing Brewster's and Brann's actions without prejudice.18

18 We note that in 1994, the General Assembly enacted Code § 8.01-275.1, which codifies the one year service provision of Rule 3:5(e). This Code section, like the Rule, does not address the effect of the dismissal. That statute is not at issue in this case.

- 336 - Computing One-Year & Application of the "Savings" Statute

FREY v. JEFFERSON HOMEBUILDERS, INC. 251 Va. 375, 467 S.E.2d 788 (1996)

JUSTICE WHITING delivered the opinion of the Court. In this appeal, the primary issue is whether a statutory extension of the time for serving process applies to Rule 3:5(e). . . . Alleging a breach of contract, Michael B. Frey and Patricia A. Frey, his wife, filed a motion for judgment against Jefferson Homebuilders, Inc. (Jefferson) on November 12, 1993. The record does not indicate that the Freys furnished Jefferson's address to the clerk when their motion for judgment was filed, as required by another provision of [the Rules] and by Code § 8.01-290. One year and two days later, on Monday, November 14, 1994, counsel for the Freys requested the clerk to issue process, which counsel had delivered to Jefferson's registered agent on that day by Crystol L. Hiserman, a person who purported to be a private process server. Hiserman failed to make a return thereof until almost two months after such delivery. Jefferson moved to quash the alleged service on the grounds that Hiserman was not authorized to serve process and that she failed to make a return of the purported service until almost two months thereafter. In support of the latter ground, Jefferson cited Code §8.01-325, which requires return of service to be made "promptly to the clerk's office." For both these reasons, the court found that process had not been properly served. However, it overruled Jefferson's motion on the ground that its registered agent's actual receipt of the notice of motion for judgment was sufficient service under Code § 8.01- 288. Whereupon, Jefferson filed a motion to dismiss the action on the ground that Rule 3:5(e) precluded the entry of a judgment against it since it had been served with process more than one year after the action was commenced. The court sustained this motion and the Freys appeal . . . . In addressing the Freys' assignment of error, we will assume that the court correctly ruled that the delivery of process was valid under the saving provision of Code § 8.01-

- 337 - 288. Thus, we consider whether Rule 3:5(e) prevented the court from entering a judgment in favor of the Freys because process was served more than a year after the Freys commenced their action. The Freys note that the clerk's office was closed on Friday, November 11, 1994, a legal holiday, and did not reopen until Monday, November 14. Accordingly, the Freys argue that the one-year limitation in Rule 3:5(e) is subject to the following statutory extension in Code §1-210:19 A. When an act of the General Assembly or rule of court requires that an act be performed a prescribed amount of time before a motion or proceeding, the day of such motion or proceeding shall not be counted against the time allowed, but the day on which such act is performed may be counted as part of the time. When an act of the General Assembly or rule of court requires that an act be performed within a prescribed amount of time after any event or judgment, the day on which the event or judgment occurred shall not be counted against the time allowed. B. When the last day for performing an act during the course of a judicial proceeding falls on a Saturday, Sunday, legal holiday, or any day or part of a day on which the clerk's office is closed as authorized by an act of the General Assembly, the act may be performed on the next day that is not a Saturday, Sunday, legal holiday, or day or part of a day on which the clerk's office is closed as authorized by an act of the General Assembly. C. When an act of the General Assembly specifies a maximum period of time in which a legal action may be brought and the last day of that period falls on a Saturday, Sunday, legal holiday, or day or part of a day on which the clerk's office is closed as authorized by an act of the General Assembly, the action may be brought on the next day that is not a Saturday, Sunday, legal holiday, or day or part of a day on which the clerk's office is closed as authorized by an act of the General Assembly. Jefferson responds that Code §1-210 is inapplicable because Rule 3:5(e) neither establishes a "last day" to serve process on a defendant, nor invalidates the service of process in this case. Instead, Jefferson contends that Rule 3:5(e) merely prohibits the court from entering judgment for a plaintiff who fails to serve process within a year after his action is commenced. We disagree. We think this construction results in the absurdity of validating a delayed service but effectively nullifying that service. And absurd constructions are to be avoided even in rules that are unambiguous. See Fairfax Hospital System, Inc. v. Nevitt, 249 Va. 591, 597, 457 S.E.2d 10, 14 (1995). In our opinion, Rule 3:5(e) effectively "fixes" the 365th day after commencement of the action as the "last day" for the motion for judgment "to be served [or] delivered," thereby subjecting the one-year period of Rule 3:3 to the saving provision in [Code § 1- 210].20 Thus, since November 12, 1994, was a Saturday, [Code § 1-210] extended the date for service to be completed until Monday, November 14, "the next day that [was] not a Saturday, Sunday, or legal holiday."

19 [This section was renumbered and restated without substantive change after the Frey decision, and these Readings use the current numbering and language to avoid confusion.] 20 The Court later clarified that it meant one calendar year rather than the specific number of days.

- 338 - Therefore, we conclude that the court erred in holding that no judgment could be entered in favor of the Freys because of their delayed service of process. II. This brings us to Jefferson's assignment of cross-error. Jefferson asserts that the court erred in applying Code § 8.01-288 when it denied Jefferson's motion to quash the Freys' process. As pertinent, that statute provides: Except for process commencing actions for divorce or annulment of marriage or other actions wherein service of process is specifically prescribed by statute, process which has reached the person to whom it is directed within the time prescribed by law, if any, shall be sufficient although not served . . . as provided in this chapter. (Emphasis added). Since the process was left with its registered agent, Jefferson, a domestic corporation, contends the following statutory language specifically requires personal service on its registered agent: Process may be served on a corporation created by the laws of this State as follows: l. By personal service on any . . . registered agent of such corporation. Code § 8.01-299 (emphasis added). Thus, Jefferson argues that it is within the emphasized exception of Code §8.01-288. We do not agree. In our opinion, the emphasized language of Code § 8.01-288 evidences a legislative intent to exclude services of process from its saving provision only in certain limited instances. Such an intent is clearly established with respect to suits for divorce and annulment, which are expressly excluded from the statute's saving provision. Code § 8.01-288. In other instances, the General Assembly has included the following sentence in statutes creating actions: "The provisions of § 8.01-288 shall not be applicable to the service of process required in this subsection," or like language. See Code § 38.2- 2206(E) and (F) (uninsured motorist actions); Code § 54.1-1120(1) (Contractor Transaction Recovery Fund claims); Code § 54.1-2114(A)(1) (Real Estate Transaction Recovery Fund claims). However, we find no such language or any other language indicating a legislative intent to exclude the service provisions of Code § 8.01-299, or to exclude service in actions for breach of contract, from the saving provision of Code § 8.01-288. And we also note the use of the word "may" in Code § 8.01-299, indicating legislative recognition that some other kind of service might be proper.

- 339 - O. Contesting Service: The General Appearance Doctrine

Nature of this Trap “An appearance for any other purpose than questioning the jurisdiction of the court—because there was no service of process, or the process was defective, or the action was commenced in the wrong county, or the like—is general and not special, although accompanied by the claim that the appearance is only special.” Norfolk and Ocean View Railway Co. v. Consolidated Turnpike Co., 111 Va. 131, 136, 68 S.E. 346, 348 (1910) And in Virginia, a general appearance waives objections to matters of process. In a case decided just a few years ago, Gilpin v. Joyce, 257 Va. 579, 515 S.E.2d 124 (1999), a personal injury plaintiff filed a complaint but did not request service of process. Sixteen months later, this defendant filed a plea in bar styled as a "motion to dismiss" citing Rule 3:5(e). He also filed grounds of defense, a counterclaim arising out of the same automobile accident, a certificate of service of interrogatories, and a motion to produce. Defendant had never been served with the complaint. At argument on the plea in bar it was stipulated that plaintiff had not exercised due diligence to obtain service of process on this defendant. The trial court entered an order sustaining the plea in bar and dismissing the complaint with prejudice. The Supreme Court held that a general appearance “is a waiver of process, equivalent to personal service of process, and confers jurisdiction of the person on the court.” The Court cited Nixon v. Rowland, 192 Va. 47, 50, 63 S.E.2d 757, 759 (1951). When Gilpin was decided, Code § 8.01-277 (which had been created in 1977) gave protection from the general appearance doctrine to any person "upon whom process to answer any action has been served," by allowing that defendant to raise any defect in the issuance, service or return of process by a motion to quash filed "prior to or simultaneously with the filing of any pleading to the merits." The Court found that this language did not protect the defendant in Gilpin, because the statute only applied where process has actually been served on the defendant. Thus, in Gilbreath v. Brewster, discussed earlier in this Chapter, the Court had held that the defendants, who were actually served with process more than one year after commencement of the action against them, were entitled to dismissal of the claim against them with prejudice under Rule 3:5(e) while still maintaining a counterclaim and a third-party claim. Statutory Protections Reverse Gilpin v. Joyce? The General Assembly passed 2006 Va. Acts ch. 151, adding the following new subpart (B) to Code § 8.01-277: B. A person, upon whom process has not been served within one year of commencement of the action against him, may make a , which does not constitute a general appearance, to file a motion to dismiss. Upon finding that the plaintiff did not exercise due diligence to have timely service and sustaining the motion to dismiss, the court shall dismiss the action with prejudice. Upon finding that the plaintiff did exercise due diligence to have timely service and denying the motion to dismiss, the court shall require the person filing such motion to file a responsive pleading within 21 days of such ruling. Nothing herein shall prevent the plaintiff from filing a nonsuit under section 8.01-380 before the entry of an order granting a motion to

- 340 - dismiss pursuant to the provisions of this section. Nothing in this subsection shall pertain to cases involving asbestos. Code § 8.01-277, as thus amended, protects the right of a person who has not been served with process to make a special appearance, effectively obviating the case law discussed above, which had found such an appearance to be "voluntary" and hence a waiver of objections. Remnants of the General Appearance Doctrine. It is still Virginia law after the addition of subsection (B) to Code § 8.01-277 that a general appearance waives all questions concerning failure to serve process. Therefore, a defendant who was served with process more than one year after commencement of an action but who did not file a motion under Code § 8.01-277 attacking the service prior to, or contemporaneously with, his responsive pleading cannot raise the bar against judgment in Rule 3:5(e) after having entered a general appearance, the Supreme Court held in Lyren v. Ohr, 271 Va. 155, 623 S.E.2d 883 (2006). While Rule 3:5(e) states that no judgment shall be entered against a defendant who was served with process more than one year after the commencement of the action against him unless the court finds as a fact that the plaintiff exercised due diligence to have timely service on him, this decision holds that any appearance for a purpose other than questioning the jurisdiction of the court — because there was no service of process, or the process was defective, or the service thereof was defective, or the action was commenced in the wrong county, or the like – is general and not special, although accompanied by the claim that the appearance is only special. Thus even under the modern statutes there was no question that the defendant entered a general appearance when he filed an answer and grounds of defense. A general appearance is a waiver of process, equivalent to personal service of process, and confers jurisdiction of the person on the court.

- 341 - P. Commencing Claims Against the Commonwealth

Since the sovereign was immune at common law, the Virginia statutes which embody a limited waiver of that traditional protection are construed narrowly and strictly. The Code includes key provisions which – in effect – condition a plaintiff's right to rely on the waiver of sovereign immunity upon plaintiff's compliance with the notification procedures and timing limitations enacted as part of what is known as the Virginia Tort Claims Act. Two of the key sections include:

§ 8.01-195.3. Commonwealth, Transportation District or Locality Liable for Damages in Certain Cases. Subject to the provisions of this article, the Commonwealth shall be liable for claims for money only accruing on or after July 1, 1982, and any transportation district shall be liable for claims for money only accruing on or after July 1, 1986, on account of damage to or loss of property or personal injury or death caused by the negligent or wrongful act or omission of any employee while acting within the scope of his employment under circumstances where the Commonwealth or transportation district, if a private person, would be liable to the claimant for such damage, loss, injury or death. However, except to the extent that a transportation district contracts to do so pursuant to § 15.2-4518, neither the Commonwealth nor any transportation district shall be liable for interest prior to judgment or for punitive damages. The amount recoverable by any claimant shall not exceed . . . $ 100,000 for causes of action accruing on or after July 1, 1993, or (ii) the maximum limits of any liability policy maintained to insure against such negligence or other tort, if such policy is in force at the time of the act or omission complained of, whichever is greater, exclusive of interest and costs. Notwithstanding any provision hereof, the individual immunity of judges, the Attorney General, attorneys for the Commonwealth, and other public officers, their agents and employees from tort claims for damages is hereby preserved to the extent and degree that such persons presently are immunized. Any recovery based on the following claims are hereby excluded from the provisions of this article: 1. Any claim against the Commonwealth based upon an act or omission which occurred prior to July 1, 1982. 1a. Any claim against a transportation district based upon an act or omission which occurred prior to July 1, 1986. 2. Any claim based upon an act or omission of the General Assembly or district commission of any transportation district, or any member or staff thereof acting in his official capacity, or to the legislative function of any agency subject to the provisions of this article. 3. Any claim based upon an act or omission of any court of the Commonwealth, or any member thereof acting in his official capacity, or to the judicial functions of any agency subject to the provisions of this article. 4. Any claim based upon an act or omission of an officer, agent or employee of any agency of government in the execution of a lawful order of any court.

- 342 - 5. Any claim arising in connection with the assessment or collection of taxes. 6. Any claim arising out of the institution or prosecution of any judicial or administrative proceeding, even if without probable cause. 7. Any claim by an inmate of a state correctional facility, as defined in § 53.1-1, unless the claimant verifies under oath, by affidavit, that he has exhausted his remedies under the adult institutional inmate grievance procedures promulgated by the Department of Corrections. The time for filing the notice of tort claim shall be tolled during the pendency of the grievance procedure. Nothing contained herein shall operate to reduce or limit the extent to which the Commonwealth or any transportation district, agency or employee was deemed liable for negligence as of July 1, 1982, nor shall any provision of this article be applicable to any county, city or town in the Commonwealth or be so construed as to remove or in any way diminish the sovereign immunity of any county, city or town in the Commonwealth.

§ 8.01-195.6. Notice of Claim. [Former language; see revision after Halberstam] Every claim cognizable against the Commonwealth or a transportation district shall be forever barred unless the claimant or his agent, attorney or representative has filed a written statement of the nature of the claim, which includes the time and place at which the injury is alleged to have occurred and the agency or agencies alleged to be liable. The statement shall be filed with the Director of the Division of Risk Management or the Attorney General within one year after such cause of action accrued if the claim is against the Commonwealth. If the claim is against a transportation district the statement shall be filed with the chairman of the commission of the transportation district within one year after the cause of action accrued. However, if the claimant was under a disability at the time the cause of action accrued, the tolling provisions of § 8.01-229 shall apply. The claimant or his agent, attorney or representative shall, in a claim cognizable against the Commonwealth, mail the notice of claim via the United States Postal Service by certified mail, return receipt requested, addressed to the Director of the Division of Risk Management or the Attorney General in Richmond. The notice, in a claim cognizable against a transportation district, shall be mailed via the United States Postal Service by certified mail, return receipt requested, addressed to the chairman of the commission of the transportation district In any action contesting the filing of the notice of claim, the burden of proof shall be on the claimant to establish mailing and receipt of the notice in conformity with this section. The signed return receipt indicating delivery to the Director of the Division of Risk Management, the Attorney General, or the chairman of the commission of the transportation district, when admitted into evidence, shall be prima facie evidence of filing of the notice under this section. The notice shall be deemed to be timely filed if it is sent by certified mail, return receipt requested, and if the official receipt for the notice shows the mailing was within the prescribed time limits. Claims against the Commonwealth involving medical malpractice shall be subject to the provisions of this article and to the provisions of Chapter 21.1 (§

- 343 - 8.01-581.1 et seq.) of this title. However, the recovery in such a claim involving medical malpractice shall not exceed the limits imposed by § 8.01- 195.3.

HALBERSTAM v. COMMONWEALTH OF VIRGINIA 251 Va. 248, 467 S.E.2d 783 (1996)

JUSTICE LACY delivered the opinion of the Court. The dispositive issue in this appeal is whether the appellant complied with the notice requirement of the Virginia Tort Claims Act, Code §§ 8.01-195.1 through -195.9 (the Act). Appellant, Barbara Halberstam, was injured on October 5, 1993 when she fell in a [pothole in a] parking lot at George Mason University (GMU), a state supported university. Following the accident, Halberstam communicated with GMU and the Division of Risk Management of the Commonwealth on a number of occasions regarding the nature and extent of her injuries. In all, Halberstam sent seven letters. At the conclusion of the correspondence, the Commonwealth denied liability for Halberstam's injury. Halberstam's appeal raises a number of issues. Most are related to the construction and application of the one-year notice provision of the Act. That provision, Code § 8.01-195.6, states, in relevant part: Every claim cognizable against the Commonwealth . . . shall be forever barred unless the claimant or his agent, attorney or representative has filed a written statement of the nature of the claim, which includes the time and place at which the injury is alleged to have occurred and the agency or agencies alleged to be liable. . . . The claimant or his agent, attorney or representative shall, in a claim cognizable against the Commonwealth, mail the notice of claim via the United States Postal Service by certified mail, return receipt requested, addressed to the Director of the Division of Risk Management or the Attorney General in Richmond. Halberstam contends, initially, that a letter, dated March 14, 1994, from her counsel to the Director of the Division of Risk Management in Richmond complied with the Act's notice requirement. The letter read, in pertinent part, On October 5, 1993, Mrs. Halberstam, a student at George Mason University, was parking her vehicle in the school parking lot at approximately

- 344 - 7:45 p.m. She parallel parked alongside the curb and began to exit her vehicle. Due to the fact that the area where she parked was unlit, she did not notice a pothole or eroded area in the asphalt of the parking lot. Upon exiting her vehicle she stepped into this eroded area/pothole which caused her to lose her balance, fall and injure herself. George Mason University was responsible for maintaining the parking lot where these injuries occurred. In the alternative, she argues that the March 14 letter considered in combination with her other correspondence establishes substantial compliance with the notice provision. We reject both contentions. The Act is a statute in derogation of the common law doctrine of sovereign immunity and, therefore, must be strictly construed. Baumgardner v. Southwestern Virginia Mental Health Inst., 247 Va. 486, 489, 442 S.E.2d 400, 401 (1994). Thus, strict compliance with all of its provisions is required.21 The language of Code § 8.01-195.6 is unambiguous. Notice must include (1) the time and place at which the injury allegedly occurred and (2) the agency or agencies allegedly liable. This notice must be sent through the United States Postal Service by certified mail, return receipt requested, addressed to the Director of the Division of Risk Management or the Attorney General in Richmond. Halberstam's notice does not meet the statutory requirements because it does not specify the location of the injury. Rather, it merely states that the accident occurred in "the school parking lot" of GMU. The parties stipulated that GMU has a number of parking lots and more than one campus. Halberstam did not specify in which parking lot of which GMU campus she was injured. Such lack of detail is, in essence, no notice at all. The need for specificity when providing notice to a government of a tort claim has been emphasized by this Court before. In Town of Crewe v. Marler, 228 Va. 109, 319 S.E.2d 748 (1984), we dealt with the notice provisions of [former] Code § 8.01-222, which apply to suits against cities and towns. This Court held that the plaintiff failed to give proper notice to the city because her written notice stated that the accident occurred "in your town." Id. at 111, 114, 319 S.E.2d at 749, 750. This description was deemed inadequate despite the fact that only substantial compliance with the notice provision was required and that the town had actual notice of the exact location of the accident. Id. at 113-14, 319 S.E.2d at 749-50. Halberstam contends that, even if her March 14 letter alone was insufficient, her other correspondence is cognizable in establishing compliance with the statute's requirements. She points to the earlier letters which specify the campus and parking lot where the accident occurred. Only the March 14 letter, however, was sent to an official designated in the statute and in the manner prescribed by the statute, certified mail with a return receipt requested. Thus, in this case, that letter alone must contain the statutorily required

21 Halberstam argues at length that strict construction is not required because the Commonwealth was not immune for claims based on its proprietary actions under the common law and, thus, the Act did not waive any common law immunity. Halberstam misapplies the dichotomy between proprietary and governmental acts as they relate to questions of governmental immunity. Most of the cases relied on by Halberstam are inapposite because they involved the type of immunity available to municipalities, or to individual government employees sued in their individual capacity, not the immunity of the Commonwealth or its agencies. In no case has the Commonwealth or its agencies been held liable for damages in a tort cause of action based on an activity labeled proprietary by this Court.

- 345 - information. Halberstam also argues that the Director probably had actual knowledge of the location of the accident due to certain other letters and she should have been allowed the opportunity to establish actual knowledge. This argument is unpersuasive. The Commonwealth concedes that the Director had actual notice but actual notice does not obviate Halberstam's duty to strictly comply with the Act's notice provisions. Marler again provides guidance. In that case, the Town of Crewe had actual notice of the accident's location. Marler, 228 Va. 112, 319 S.E.2d at 749. However, this Court held that the town's knowledge had no effect on whether the claimant substantially complied with the statute. We explained that the arbitrary and peremptory provisions of the statute are necessary to accomplish the purposes of the enactment. Unless explicit notice in writing of the time and place of an accident is furnished the proper public official substantially in accordance with the statute, when there is a claim of municipal negligence, the likelihood of prompt attention to the matter to protect the interests of the municipality and the public is materially diminished. For this Court to place any limitation on the clear and comprehensive language of the statute, or to create an exception where none exists under the guise of statutory construction, would be to defeat the purpose of the enactment and to engage in judicial legislation. Id. at 113-14, 319 S.E.2d at 750. The same rationale applies with no less force to the notice provisions of the Virginia Tort Claims Act, provisions which are to be strictly construed. Lastly, Halberstam asserts that the trial court erred in failing to hold that the Commonwealth was estopped from raising the notice defense because it had already rejected her claim. This argument is without merit. First, estoppel does not lie against the Commonwealth. Commonwealth v. Allstate Bonding Co., 246 Va. 189, 194, 435 S.E.2d 396, 399 (1993). Moreover, the Commonwealth's September 15, 1994 letter rejecting Halberstam's claim specifically reserved the Commonwealth's right to rely on all procedural and substantive defenses. Accordingly, for the reasons stated, we will affirm the order of the trial court.

Notes on Giving Notice

Designating the "Place" of the Injury. Case law has held that where a claimant did not specify where she was injured, the claimant's notice of claim was in essence, no notice at all. In holding that the claimant’s notice of claim did not satisfy the requirements of Code § 8.01-195.6 with regard to the place at which the injury occurred, the Supreme Court also noted that actual knowledge of that place by the Commonwealth does not obviate the duty of the claimant to strictly comply with the notice provisions of this statute. It observed that “ ‘[u]nless explicit notice in writing of the time and place of an accident is furnished the proper public official substantially in accordance with the statute, when there is a claim of [the Commonwealth’s] negligence, the likelihood of prompt attention to the matter to protect the interests of the [Commonwealth] and the public is materially diminished.’ ” Halberstam v. Commonwealth, 251 Va. 248, 250¬52, 467 S.E.2d 783, 784-85 (1996). In another case, however, the Court found a notice of claim filed by the plaintiff sufficiently complied with the requirements of Code § 8.01-195.6 regarding the

- 346 - identification of the place at which the injury to the decedent was alleged to have occurred. In a wrongful death action against the Commonwealth under the Virginia Tort Claims Act, a notice of claim naming a university "medical center" was sufficient to comply with the requirements of Code § 8.01-195.6 for identification of the “place” where the injury was alleged to have occurred. The Court held that the degree of specificity sufficient to comply with the requirement of notice of the place at which the injury is alleged to have occurred contemplated by this statute is not dictated or varied by whether the claimant asserts a premises liability, medical malpractice, or some other cognizable tort claim against the Commonwealth. See Bates v. Commonwealth, 267 Va. 387, 593 S.E.2d 250 (2004). Thus, while the Commonwealth's superior knowledge of the place of injury is not a factor in determining the sufficiency of the mandated notice, and the Virginia Tort Claims Act must be strictly construed because it was enacted in derogation of the common law of sovereign immunity, the requirements of Code § 8.01-195.6 must be construed in light of its purpose to provide notice to the Commonwealth of a facially cognizable claim so that the Commonwealth is in a position to investigate and evaluate that claim. The Supreme Court concluded that the statute’s mandate that the notice of claim include the “place at which the injury is alleged to have occurred” contemplates the reasonable identification of that place so that the purpose of the notice to the Commonwealth is accomplished in a particular case. The Court noted that the concept of reasonableness "does not lend itself to a bright-line test or dictate separate and distinct tests based on the nature of the asserted claim. Rather, its proper analysis and application is directed to the specific allegations of a notice of claim in a particular case." Thus in a case where there was only one university medical center in the city where the alleged events took place and the plaintiff's notice of claim identified that place and also stated that decedent was admitted to that hospital and “while a patient” there was injured by the alleged medical negligence of the employees of that hospital, the combination of these assertions reasonably identified the place at which it was alleged the decedent was injured so that the Commonwealth could investigate and evaluate the claim. To nail the point home, the Court expressly stated that under these circumstances, Code § 8.01-195.6 does not mandate that plaintiff was required to identify the floor or room within the hospital at which the alleged injury to decedent occurred because that degree of specificity was unnecessary to accomplish the purpose of the statute. No Requirement to Plead Proper Notice. Code §§ 8.01-195.1 through -195.9, being in derogation of the common law, are strictly construed. Nonetheless, the demanding provisions of Code § 8.01-195.6 requiring a particular form of notice by the claimant or his attorney or representative to the Commonwealth does not mean that, as a jurisdictional prerequisite, there is any requirement that there be appended to a complaint seeking relief under the Act a copy of the original certified mail return receipt, or an affidavit to the effect that the notice had been sent and received as specified by the statute, is rejected. The statute merely places upon the claimant the burden of proving proper mailing and receipt of the notice of claim in cases in which its filing is contested. In the absence of a contest concerning the giving of actual notice, such “documentation” at the pleading stage is unnecessary. Billups v. Carter, 268 Va. 701, 04 S.E.2d 414 (2004).

- 347 -

- 348 - Recent Statutory Changes – Mechanics and Strict Construction

In Melanson v. Commonwealth, 261 Va. 178, 539 S.E.2d 433 (2001) the Supreme Court applied the reasoning of Halberstam to invalidate a claim where plaintiff's counsel mailed a letter to the Commonwealth to give notice of claim as required by the statutes, then started to worry whether it would be delivered on time. Counsel arranged for hand delivery of a copy of the letter within the required time, but the mailed letter arrived at the correct office in Richmond after one year had passed. Held: "strict compliance with all [the Act's] provisions is required," and the plaintiff's claim was barred. In 2007 changes were made to the notice provisions applicable to claims against the Commonwealth, and similar terms were embodied in a new statute replacing former provisions that governed notice to cities, and these sections were expanded to require notice to counties about claims in the same fashion. On one hand the changes liberalized procedures, by allowing a variety of delivery mechanisms and flexible means to prove that notice was given. On the other hand the canon of very strict construction, set forth in Halberstam and Melanson, is expressly continued. Compare the language of the "old" state Tort Claims section (Code § 8.01- 195.6) set forth before Halberstam, with the revised version and the locality-notice provisions now in effect:

§ 8.01-195.6. Notice of claim A. Every claim cognizable against the Commonwealth or a transportation district shall be forever barred unless the claimant or his agent, attorney or representative has filed a written statement of the nature of the claim, which includes the time and place at which the injury is alleged to have occurred and the agency or agencies alleged to be liable, within one year after such cause of action accrued. However, if the claimant was under a disability at the time the cause of action accrued, the tolling provisions of § 8.01-229 shall apply. B. If the claim is against the Commonwealth, the statement shall be filed with the Director of the Division of Risk Management or the Attorney General. If the claim is against a transportation district the statement shall be filed with the chairman of the commission of the transportation district. C. The notice is deemed filed when it is received in the office of the official to whom the notice is directed. The notice may be delivered by hand, by any form of United States mail service (including regular, certified, registered or overnight mail), or by commercial delivery service. D. In any action contesting the filing of the notice of claim, the burden of proof shall be on the claimant to establish receipt of the notice in conformity with this section. A signed United States mail return receipt indicating the date of delivery, or any other form of signed and dated acknowledgment of delivery given by authorized personnel in the office of the official with whom

- 349 - the statement is filed, shall be prima facie evidence of filing of the notice under this section. E. Claims against the Commonwealth involving medical malpractice shall be subject to the provisions of this article and to the provisions of Chapter 21.1 (§ 8.01-581.1 et seq.) of this title. However, the recovery in such a claim involving medical malpractice shall not exceed the limits imposed by § 8.01-195.3.

Notice of Claims Against Cities and Towns – And Now Counties Too.

The draconian one-year notice requirement under the State's Tort Claims Act is outdone by a requirement for claims against localities that – despite the statutes of limitations for injuries to persons or property (two years and five years respectively), no claim can go forward against a locality if "notice" of the claim is not provided in writing to the prospective defendant within six months of the incident.

§ 15.2-209. Notice to be given to counties, cities, and towns of tort claims for damages A. Every claim cognizable against any county, city, or town for negligence shall be forever barred unless the claimant or his agent, attorney, or representative has filed a written statement of the nature of the claim, which includes the time and place at which the injury is alleged to have occurred, within six months after such cause of action accrued. However, if the claimant was under a disability at the time the cause of action accrued, the tolling provisions of § 8.01-229 shall apply. B. The statement shall be filed with the county, city, or town attorney or with the chief executive or mayor of the county, city, or town. C. The notice is deemed filed when it is received in the office of the official to whom the notice is directed. The notice may be delivered by hand, by any form of United States mail service (including regular, certified, registered or overnight mail), or by commercial delivery service. D. In any action contesting the filing of the notice of claim, the burden of proof shall be on the claimant to establish receipt of the notice in conformity with this section. A signed United States mail return receipt indicating the date of delivery, or any other form of signed and dated acknowledgment of delivery, given by authorized personnel in the office of the official with whom the statement is filed, shall be prima facie evidence of filing of the notice under this section. E. This section does not, and shall not be construed to, abrogate, limit, expand or modify the sovereign immunity of any county, city, town, or any officer, agent or employee of the foregoing. F. This section, on and after June 30, 1954, shall take precedence over the provisions of all and amendments thereto of municipal corporations in conflict herewith granted prior to such date. It is further declared that as to any such charter or amendment thereto, granted on and after such date, that any

- 350 - provision therein in conflict with this section shall be deemed to be invalid as being in conflict with Article IV, Section 12 of the Constitution of Virginia unless such conflict be stated in the title to such proposed charter or amendment thereto by the words "conflicting with § 15.2-209 of the Code" or substantially similar language. G. The provisions of this section are mandatory and shall be strictly construed. This section is procedural and compliance with its provisions is not jurisdictional.

"Presentment" Requirement for Claims Against Counties, and Another Deadline

In addition to the six-month notice requirement set forth above, with respect to counties (and, oddly, not cities or towns, and not the Commonwealth of Virginia) there is a "presentment requirement" that requires a person to ask the governing body of the county to pay the claim – as a prerequisite to bringing suit for non-payment of the claim. The current statutes are:

§ 15.2-1246. Appeal from disallowance of claim When a claim of any person against a county is disallowed in whole or in part by the governing body, if such person is present, he may appeal from the decision of the governing body within thirty days from the date of the decision. If the claimant is not present, the clerk of the governing body shall serve a written notice of the disallowance on him or his agent, and he may appeal from the decision within thirty days after service of such notice. In no case shall the appeal be taken after the lapse of six months from the date of the decision. The appeal shall be filed with the circuit court for the county. No appeal shall be allowed unless the amount disallowed exceeds ten dollars. The disallowance may be appealed by serving written notice on the clerk of the governing body and executing a bond to the county, with sufficient surety to be approved by the clerk of the governing body, with condition for the faithful prosecution of such appeal, and the payment of all costs imposed on the appellant by the court.

§ 15.2-1248. No action against county until claim presented to governing body No action shall be maintained by any person against a county upon any claim or demand until such person has presented his claim to the governing body of the county, unless the governing body has entered into a binding arbitration agreement or there is a provision in a written contract with the county to submit to arbitration any controversy thereafter arising. When there exists such a provision in a contract or there is a written agreement to arbitrate, the provisions of the Uniform Arbitration Act, Article 2 (§ 8.01-581.01 et seq.) of Chapter 21 of Title 8.01, shall apply.

- 351 -

Indeed there is also a complex interplay of two timetables, explained in detail in Viking Enterprise, Inc. v. County of Chesterfield, 277 Va. 104, 670 S.E.2d 741 (2009), where the Court summarized the various timing requirements in such cases:

we conclude that the procedural requirements set forth in Code §§ 2.2-4363(E) and -4364(E) do not conflict with the notice and bond requirements of Code § 15.2-1246. Thus, we hold that, when appealing from a county's disallowance of a claim arising out of a contract covered by the Procurement Act, the claimant must serve written notice of its appeal on the clerk of the county's governing body and execute a bond to the county, both within 30 days from the date of either the decision or service of written notice of the denial, in accordance with Code § 15.2-1246. The claimant must then institute legal action in the appropriate circuit court within six months of the date of the decision denying the claim, in accordance with Code §§ 2.2-4363(E) and - 4364(E). Because Viking failed to comply with the requirements of Code § 15.2-1246, we will affirm the judgment of the circuit court.

Note: What IS a Claim?

One suspects that the above statutes were created for contract claims. While there is no "definitions" section to tell us what a "claim" is, Code § 15.2-1245 in setting forth the procedure for allowance of claims states the general rule that "No account shall be allowed by the governing body of the county unless made out in separate items with the nature of each item specifically stated. When no specific fees are allowed by law, the time actually and necessarily devoted to the performance of any service charged in such account shall be verified by affidavit, which shall be filed with the account." Despite the strong inference that these are not provisions regarding tort claims (the counties are, after all, immune from tort liability for all their functions), local government attorneys tell your editor that counties commonly take the position that tort claims must also be presented in this fashion – on pain of being barred. The Supreme Court has not addressed this specific use of the statutes, to date. In Nuckols v. Moore, 234 Va. 478, 362 S.E.2d 715 (1987) the Court held that these statutes were limited to "monetary" claims, and hence applications for equitable relief need not be presented for formal rejection as a prelude to suit. It cited numerous cases, none of which was a tort suit.

- 352 - Q. Immunity From Service.

The following Code section is read to say that service of process in civil actions may not be made effectively when the statute offers protection. Thus while the language on its face seems to preclude only arrest, the issue today seems to be whether one can achieve binding service of process when the immunity statute applies.

§ 8.01-327.2. Who are Privileged from Arrest under Civil Process. In addition to the exemptions made by §§ 30-4, 30-6, 30-7, 30-8, 19.2- 280, and 44-97, the following persons shall not be arrested, apprehended, or detained under any civil process during the times respectively herein set forth, but shall not otherwise be privileged from service of civil process by this section: 1. The President of the United States, and the Governor of the Commonwealth at all times during their terms of office; 2. The Lieutenant Governor of the Commonwealth during attendance at sessions of the General Assembly and while going to and from such sessions; 3. Members of either house of the Congress of the United States during the session of Congress and for fifteen days next before the beginning and after the ending of any session, and during any time that they are serving on any committee or performing any other service under an order or request of either house of Congress; 4. A judge, grand juror or witness, required by lawful authority to attend any court or place, during such attendance and while going to and from such court or place; 5. Members of the national guard or naval militia while going to, attending at, or returning from, any muster or court-martial; 6. Ministers of the gospel while engaged in performing religious services in a place where a congregation is assembled and while going to and returning from such place; and 7. Voters going to, attending at, or returning from an election. Such privilege shall only be on the days of such attendance.

- 353 - LESTER v. BENNETT 1 Va. App. 47, 333 S.E.2d 366 (1985)

JUDGE BENTON delivered the opinion of the Court. Michael Granville Lester contends in this appeal that he was immune from arrest and service of process in connection with an action brought by his former wife, Mary Lagale O'Neal Lester Bennett, in the Circuit Court of the City of Radford to collect delinquent child support payments. The arrest and service of process were made while Lester was in the Juvenile and Domestic Relations District Court of Pulaski County seeking to obtain custody of their minor child. Lester and Bennett were divorced May 9, 1975, by decree of the Circuit Court of the City of Radford. The decree awarded custody of the minor children to Bennett and granted leave to Bennett to proceed in the juvenile and domestic relations district court for a support order. On January 7, 1981, upon Bennett's petition, the circuit court reinstated the divorce suit on the docket and ordered Lester, whose last known address was in South Carolina, to pay $300 per month support for the minor children. On October 4, 1984, the Juvenile and Domestic Relations District Court of Pulaski County issued a summons for Lester's appearance in connection with a proceeding instituted by Lester for the custody of his son, Michael G. Lester, Jr. The summons was issued at the suggestion of Lester's attorney and was to be served upon Lester, a resident, by service upon his attorney. On October 16, 1984, the circuit court entered an order directing the arrest of Lester and requiring him to show cause why he should not be imprisoned for contempt for failure to comply with the previous orders. Upon Lester's arrival at the juvenile and domestic relations district court on October 22, 1984, for the custody hearing, he was served with the circuit court's show cause order and arrested. Hearing Lester's counsel by special appearance, the circuit court determined that it had jurisdiction to proceed, ruled that Lester was not immune from arrest and service of process, found him in contempt, and ordered him to commence support payments that day. This appeal ensued. Lester relies upon Code §§ 8.01-327.2 and 19.2-280 for immunity from service of process and arrest. Code § 19.2-280, part of Virginia's version of the Uniform Act to Secure the Attendance of Witnesses from without a State in Criminal Proceedings, was enacted by the General Assembly to compel the attendance of nonresident witnesses in criminal proceedings. It provides that a person who comes into the state in obedience to a summons shall not, while in the state pursuant to the summons, be subject to arrest or service of process, civil or criminal, in connection with matters which arose before his entrance in response to the summons. Id.; Davis v. Hackney, 196 Va. 651, 654, 85 S.E.2d 245, 247 (1955). Non-resident witnesses could not be compelled to attend and testify in the criminal courts of this Commonwealth prior to the passage of the Uniform Act. Davis v. Hackney, 196 Va. at 654, 85 S.E.2d at 247. Chapter 16, Article 2, which includes Code § 19.2-280, applies only to witnesses summoned in connection with a or a criminal action, prosecution, or proceeding. Lester was not in this state in obedience to a summons to attend and testify

- 354 - in a criminal proceeding; therefore, Code § 19.2-280 provides no basis upon which he may claim immunity from arrest or service of process. The Uniform Act, however, did not supplant the common law but was enacted in furtherance of the common law. Davis v. Hackney, 196 Va. at 654, 85 S.E.2d at 247. Several early Virginia cases state that exemption from arrest and service of process on a person attending court is a common law privilege. Commonwealth v. Ronald, 8 Va. (4 Call) 97 (1786); Richards v. Goodson, 4 Va. (2 Va. Cas.) 381 (1823). The privilege was seen as extending to judges, attorneys, witnesses and the parties. Commonwealth v. Ronald, 8 Va. at 98. In Wheeler v. Flintoff, 156 Va. 923, 159 S.E. 112 (1931), the Supreme Court stated that the reason for the privilege is: for the better protection of the courts in the administration of justice, and to prevent the intimidation of suitors, and witnesses, and the disturbance of officers of the court in the performance of their duties. It is primarily for the protection of courts, the privilege to the individual is merely incidental. Id. at 928, 159 S.E. at 113. Code § 8.01-327.2, the other statutory provision upon which Lester relies for his claim of immunity, reads in pertinent part: [T]he following persons shall not be arrested, apprehended, or detained under any civil process during the times respectively herein set forth, but shall not otherwise be privileged from service of process by this section: . . . . (4) [A] witness, required by lawful authority to attend any court or place, during such attendance and while going to and from such court or place. Code § 8.01-327.2 does not repudiate the common law rule, but it does create an exception to the privilege by permitting service of civil process upon a judge, grand juror or witness. Although the common law privilege was extended to attorneys and parties, Commonwealth v. Ronald, 8 Va. at 98, Code § 8.01-327.2 by its terms does not apply to either attorneys or parties. Therefore, immunity from arrest and service of process is available to Lester only if permitted under the common law. The courts also have created exceptions to the common law immunity from arrest and service of process. In Lamb v. Schmitt, 285 U.S. 222 (1932), the Supreme Court noted the rationale for the privilege -- "the due administration of justice" -- and held that because the privilege is for the benefit of the courts, it should be "extended or withheld only as judicial necessities require." Id. at 225. The Lamb decision also recognized an exception to the immunity doctrine and stated that the test for granting or withholding immunity is "whether the immunity itself, if allowed, would so obstruct judicial administration in the very cause for the protection of which it is invoked as to justify withholding it." Id. at 228. This "related-litigation" exception has been applied in a number of contexts in which there was a relationship between the subject matter of the litigation in which process was issued and the subject matter of the litigation which the non-resident served was attending. See generally Annot., 84 A.L.R.2d 421 (1962). Although there are few Virginia cases which discuss common law immunity and none which discuss the

- 355 - "related-litigation" exception, we believe the application of the exception to this case is both appropriate and warranted. Both the support action in which the capias was issued for Lester's arrest and the custody action which Lester was attending when he was served and arrested arose from and were incidental to the divorce decree entered May 9, 1975. The divorce decree awarded custody of the minor children to Bennett and initially referred the support determination to the juvenile and domestic relations district court. Subsequent to the entry of the decree, the circuit court which granted the divorce reinstated the cause on the docket and entered the support order, the violation of which provided the basis for the issuance of the capias. Both the support and custody matters involved issues concerning the relationship between the parents and the child and, in the context of this case, were inextricably linked to each other and to the 1975 decree. Lester's contention that his appearance before the juvenile and domestic relations district court was primarily that of a witness who had been directed to attend and testify is unpersuasive. Lester initiated the proceeding in the juvenile and domestic relations district court in order to obtain custody over the very child whom he had failed to support in accordance with a previous order of the circuit court. He arranged to have his counsel served with a summons directing his appearance at the custody proceeding. Lester has made no showing on this record that the issuance of such a summons was necessary or otherwise in aid of the judicial administration of the court. We hold, therefore, that the relationship which exists between the suit to enforce support payments and the proceeding to change custody of the minor child is such that to grant immunity to Lester would obstruct the due administration of justice. For the foregoing reasons, the judgment of the circuit court is affirmed.

Note on Persons Exempt from Service

Persons exempt from service of process. Persons who are nonresidents and who are brought into state by fraud or trickery cannot be effectively served with process. See Wheeler v. Flintoff, 156 Va. 923, 159 S.E. 112 (1931). Other than as set forth in the Lester case, it has been assumed that parties attending proceedings are immune from service of process. Witnesses entering Virginia or traveling through to testify in criminal proceedings are immune (See Davis v. Hackney, 196 Va. 651, 85 S.E.2d 245 (1955); § 19.2-280: Uniform Act to secure attendance of witnesses).

- 356 - R. Service of Papers after Appearance

Once the action is commenced and service of process has been completed, subsequent papers are served by mailing to counsel. The fact of such service is set forth at the "foot" of the paper served, in a recital called for by Rule 1:12. This rule governs the on-going action, and is applicable to counterclaims of the defendant against the plaintiff. However, when a new defendant is added, or when a cross-claim is asserted against an existing defendant, formal service of process is required. The governing statute and implementing Rules of Court are these:

§8.01-314. Service on attorney after entry of general appearance by such attorney When an attorney authorized to practice law in this Commonwealth has entered a general appearance for any party, any process, order or other legal papers to be used in the proceeding may be served on such attorney of record. Such service shall have the same effect as if service had been made upon such party personally; provided, however, that in any proceeding in which a final decree or order has been entered, service on an attorney as provided herein shall not be sufficient to constitute personal jurisdiction over a party in any proceeding citing that party for contempt, either civil or criminal, unless personal service is also made on the party. Provided, further, that if such attorney objects by motion within five days after such legal paper has been so served upon him, the court shall enter an order in the proceeding directing the manner of service of such legal paper.

Rule 1:7. Computation of Time. Whenever a party is required or permitted under these Rules, or by direction of the court, to do an act within a prescribed time after service of a paper upon counsel of record, three (3) days shall be added to the prescribed time when the paper is served by mail, or one (1) day shall be added to the prescribed time when the paper is served by facsimile, electronic mail or commercial delivery service. With respect to Parts Five and Five A of the Rules, this Rule applies only to the time for filing a brief in opposition.

Rule 1:12. Service of Papers after the Initial Process. All pleadings, motions and other papers not required to be served otherwise and requests for subpoenas duces tecum shall be served by delivering, dispatching by commercial delivery service, transmitting by facsimile, delivering by electronic mail when consented to in writing signed by the person to be served, or mailing, a copy to each counsel of record on or before the day of filing. Service pursuant to this Rule shall be effective upon such delivery, dispatch, transmission or mailing, except that papers served by facsimile transmission completed after 5:00 p.m. shall be deemed served on the next day

- 357 - that is not a Saturday, Sunday, or legal holiday. Service by electronic mail under this Rule is not effective if the party making service learns that the attempted service did not reach the person to be served. At the foot of such pleadings and requests shall be appended either acceptance of service or a certificate of counsel that copies were served as this Rule requires, showing the date of delivery and method of service, dispatching, transmitting, or mailing. When service is made by electronic mail, a certificate of counsel that the document was served by electronic mail shall be served by mail or transmitted by facsimile to each counsel of record on or before the day of service.

Rule 1:13. Endorsements. Drafts of orders and decrees shall be endorsed by counsel of record, or reasonable notice of the time and place of presenting such drafts together with copies thereof shall be served pursuant to Rule 1:12 upon all counsel of record who have not endorsed them. Compliance with this Rule and with Rule 1:12 may be modified or dispensed with by the court in its discretion.

SERVICE BY FAX, EMAIL AND COMMERCIAL DELIVERY The foregoing rules reflect the current Virginia mechanisms, and allow for service of papers after the initial complaint by fax or by overnight delivery service as alternatives to the mailing of such papers. The new rules therefore apply to service of the responsive pleading (answer or grounds of defense) and to service of motions, pleas, discovery papers and the like. These changes in one sense are modest. Filing of papers in court by fax is not included in the current rules. Rather, the revisions relate to authorization for the practice, already common in Virginia, of counsel serving each other by means other than the United States mails. The rules also permit delivery by overnight commercial courier services such as Federal Express or the United Parcel Service. These provisions also proceed from a recognition that in appropriate circumstances counsel today make wide use of such commercial services as an alternative to the mails where speed or a particular form of delivery is needed. Notice that the Rules contain provisions calling for an attorney to include in the address block of pleadings any fax machine that the attorney wishes to use for the service or receipt of papers. Thus an attorney who does not use a fax machine, and does not therefore plan to send or receive papers in that fashion, simply will not indicate such a number on papers served. Counsel who wish to make use of fax may designate such a number. The provisions governing the grace period added to response time were adjusted, to specify the number of additional days afforded to a party who is served by fax or commercial delivery service.

- 358 - Some key points about these rules are the following: Fax and delivery service use is optional under the rules. Service by mail is available and effective in all circumstances where it heretofore has been used. Counsel who wish to use facsimile service should include their fax number in the address block on pleadings and other papers; this step should be undertaken if the attorney wants to serve papers by fax, and is therefore willing to receive papers in that fashion. The grace period for mail (3 days) has been adapted for fax and overnight delivery service, so that only one day is added where the newly authorized forms of service are used. “Follow-up” by regular mail is not required under the rule where service has been accomplished by fax or overnight courier, though it would be permissible as a safety precaution. Presumably the grace period provided for the fax or courier delivery would be applicable in such cases, rather than the longer period provided where service is solely by mail. There is no page limit prescribed for faxes served under the proposed rules. Note, however, that if the transmission is not completed by 5:00 p.m., it is treated as having been made on the next business day, hence last minute faxing may not make service effective on the date the fax is attempted. Service is effective upon mailing, sending the fax, or placing the papers in the hands of a commercial delivery service.

Service by E-Mail on Consent

As shown in the Rule text above, the Supreme Court of Virginia has now included service by “email” for post-complaint service, but only upon written consent. One could agree, for example, that e-mail service of post-complaint papers is effective on the understanding that each side would also mail copies to each other as a safety-valve to protect against e-mails that disappear into the ether.

- 359 - S. Service Subpoenas to Non-Parties

BELLIS v. COMMONWEALTH OF VIRGINIA 241 Va. 257, 402 S.E.2d 211 (1991)

JUSTICE RUSSELL delivered the opinion of the Court: A physician was punished for contempt of court for failure to obey a subpoena duces tecum. His appeal questions the effectiveness of the service of the subpoena. A felony case, Commonwealth v. Jeffery Allen Noaks, was set for trial on Monday, August 15, 1988, in the Circuit Court of Wise County. The commonwealth's attorney caused a subpoena duces tecum to issue, commanding Dr. Morris Bellis to attend the trial on August 15 and to produce certain medical records pertaining to a medical examination of the victim of a malicious wounding and an attempted rape. The sheriff received the subpoena from the clerk on August 9. The sheriff's return reads "Subpoena 8-10-88 Delivered to person found in charge of usual place of business or employment during business hours and giving information of its purport. Pat Bevins - - Sect Dr. Bellis." Dr. Bellis failed to appear at the Noaks trial on August 15 and the court issued a summons requiring him to appear on the following day to show cause why he should not be held in contempt. That summons was personally served. Dr. Bellis appeared without counsel on August 16. The court heard evidence, held him in contempt, and imposed a $ 100 fine. Later, counsel appeared for Dr. Bellis and filed a motion to reconsider. By order of September 2, 1988, the court vacated the contempt order and set the case for hearing on October 17. On that date the court heard further evidence and took the matter under consideration. On January 17, 1989, the court issued a letter opinion and entered an order reinstating the finding of contempt and reimposing the fine. The Court of Appeals refused an appeal on April 26, 1990, holding that the evidence was sufficient to support the trial court's finding. We awarded Dr. Bellis an appeal. At the October 17 hearing, Pat Bevins, secretary and receptionist in Dr. Bellis' office, testified that the sheriff delivered the subpoena to her between 11:00 a.m. and 12:00 noon on Friday, August 12, and that the sheriff's return was incorrect. She further testified that the sheriff did not explain the purport of the subpoena to her, but that the commonwealth's attorney's office had called two days earlier, on August 10, to inform Dr. Bellis to expect the subpoena. Mrs. Bevins also testified that Dr. Bellis was absent from his office when the sheriff arrived with the subpoena on Friday, August 12, but that he learned of it between 2:00 and 3:00 p.m. that afternoon during a telephone conversation with Mrs. Bevins. Although the subpoena was not personally delivered to him, Dr. Bellis admitted that he knew, on Friday afternoon, that he was required to be in court on the following Monday, at 9:00 a.m., with the medical records of the victim in the Noaks case. Without returning to his office, Dr. Bellis travelled to Texas on Saturday to deliver an airplane.

- 360 - He remained there on Sunday and did not begin his return trip to Virginia until 11:00 a.m. on Monday, the day of the Noaks trial. His estimated flight time was over six hours, but he was delayed by bad weather and arrived Monday night. At some time during the day, Dr. Bellis called his office with the request that the commonwealth's attorney's office be informed of his delay.

The trial court found that the substituted service of the subpoena duces tecum was timely and proper, and, in conjunction with Dr. Bellis' actual notice, would support a conviction of contempt for his failure to appear. The court further found that Dr. Bellis had voluntarily absented himself and delayed his return and that his absence from the jurisdiction did not, in the circumstances, amount to a lawful excuse. The court concluded that Dr. Bellis had willfully and knowingly disobeyed a valid order of the court. On appeal, Dr. Bellis argues that Title 19.2 of the Code, governing criminal procedure, contains no provisions authorizing substituted service of a subpoena. He points out that Code § 19.2-267 specifically provides that certain sections contained in Title 8.01 apply to criminal as well as civil cases, but that Code § 8.01-298, authorizing substituted service of witness subpoenas, is not among them. Therefore, his argument concludes, the General Assembly must have intended that all subpoenas in criminal cases be personally served. We are not persuaded by that argument. Title 19.2 is silent with respect to the modes of service for witness subpoenas in criminal cases. It is necessary to look elsewhere for provisions governing such service. We think that the General Assembly, when codifying Title 19.2 in 1975, intended to leave the existing practice for the service of witness subpoenas in criminal cases unchanged. That practice had been prescribed for many years by statutes relating to civil procedure. See, e.g., Code of 1919, §§ 4969 and 6217.

- 361 - Code § 8.01-298 provides, in pertinent part: "[A] summons for a witness . . . may be served: 1. At his or her usual place of business or employment during business hours, by delivering a copy thereof and giving information of its purport to the person found there in charge of such business or place of employment . . . ." That section contains no language restricting its effect to civil cases. We conclude that the provisions of Title 8.01 prescribing the modes of service of witness subpoenas, including Code § 8.01-298, are equally applicable to criminal and civil cases. The trial court made a factual finding that Pat Bevins was "the person found there in charge of such business" when the sheriff delivered the subpoena to Dr. Bellis' office. The court expressed doubt that the sheriff failed to explain the meaning of the subpoena when serving it, but stated that even if such a failure were to be assumed, it would have been inconsequential because Mrs. Bevins had expected the subpoena for two days, was entirely capable of reading and understanding the simple instructions contained therein, and in fact did so in order to explain the nature of the subpoena by telephone to Dr. Bellis after she had received it. We agree. Dr. Bellis admitted to the court that he knew, on Friday afternoon, that he was under a subpoena to be in court on Monday morning with the medical records pertinent to the Noaks case. The trial court correctly held that the subpoena was validly served. No contention is made on appeal that there was an unreasonably short interval between service of the subpoena and the court appearance the subpoena commanded.22 If that were the case, however, the burden would have been on the subpoenaed witness to take such reasonable steps as time would permit to obtain an order quashing the subpoena or granting other appropriate relief. See Rule 3A:12(d); W.H. Bryson, Handbook on Virginia Civil Procedure 404 (2d ed. 1989). Shortness of time, alone, would not furnish the witness an excuse for simply ignoring the subpoena. Dr. Bellis argues that his actual knowledge of the existence and nature of the subpoena, and the fact that it had been served on his secretary, is immaterial because if actual knowledge is the sole requisite, sheriffs might dispense with service entirely, "remain in their offices, and conduct business by telephone." We agree that valid service of a subpoena in a mode prescribed by law is an essential element for a finding of contempt for failure to appear. Actual knowledge is not, however, immaterial. Where substituted service has been validly made, the sheriff's return is prima facie correct. Code § 8.01-326. The return gives time to a rebuttable presumption that the paper served, or knowledge of it, has actually reached the person sought to be served in time to permit compliance with its command. See Rowe v. Handy, 97 Va. 674, 678, 34 S.E. 625, 626 (1899). That presumption furnishes an additional element for a finding of contempt. A person sought to be served may, of course, avoid punishment for contempt if he produces evidence sufficient to rebut the presumption that he had timely knowledge of the paper. Dr. Bellis' admission that he had actual knowledge of the subpoena renders unnecessary any inquiry into this additional element.

22 Dr. Bellis does contend that a failure to appear as a witness in a criminal case is not punishable by contempt unless written notice is given at least five days before trial, citing Code § 19.2-267.1. That section relates exclusively to a summons issued "by a law-enforcement officer during the course of his immediate investigation of an alleged misdemeanor," id., and is inapplicable here.

- 362 - Disobedience to "any lawful process" is made subject to summary punishment for contempt by Code § 18.2-456(5). "Process" includes a subpoena directed to a witness. W. Burton, Legal Thesaurus 409 (1980). A finding of contempt for such disobedience must, indeed, rest upon four elements: (1) issuance of "lawful process," (2) valid service of the process by one of the modes prescribed by law, (3) timely knowledge of the process by the person upon whom service is sought, where service was not personal, and (4) willful disobedience of the process. Because the record supports the trial court's findings of lawful process, valid service, timely knowledge, and willful disobedience, we will affirm the judgment of contempt.

T. Service of Certain Writs

The Legislature has placed language in Code § 8.01-293 to make it clear that only the sheriff may serve an order or writ of possession for personal, real or mixed property, including unlawful detainer process. A similar restriction bars private process servers from handling any capias [an arrest order] or criminal show cause order, and it was specified that only the sheriff or a high constable can levy upon property. These changes eliminated the seeming authorization for private agents to conduct such activities which had resulted from the prior wording of this same code section. ______

- 363 -

Further Notes on Service Related Points

Address of Defendant. The last known address of the defendant must be provided to the clerk, either on the face of the pleading or in a separate document according to the requirements of § 8.01-290. However, that same Code section provides that failure to supply the necessary addresses does not affect the validity of a judgment. Computation of Time. As noted in Code § 1-209, set forth earlier in this Chapter, the day which commences the response obligation is not counted, and the response date is counted. There is no Virginia equivalent to the federal rule on computing dates, which distinguishes between 10-day or longer periods and shorter ones as to counting weekends. In Virginia, by contrast, all weekends and holidays "count" but in determining whether, for example, 10 days have passed. But if the last day – so computed – falls on a Saturday, Sunday or legal holiday it is automatically extended to the next business day. Sunday Service. Civil Process may not be served on Sunday (§ 8.01-289) except in cases of persons escaping out of custody, or otherwise expressly provided (see e.g., § 8.01-542: attachment may be issued or executed on Sunday or holiday).

- 364 - Hypotheticals

1. P filed suit against D in January of two years ago. However the sheriff filed a return in February stating "Not executed. D could not be found within my bailiwick". P learned that D has moved to California, but occasionally visits relatives in Fredericksburg. In May of last year P heard from friends that D was expected for such a visit, and arranged for the sheriff to serve him. D is served, but promptly retains an attorney who moves to quash the proceeding. What result, and why?

2. S, a sheriff, attempts to serve process on A, who resides in a large apartment complex. Finding no answer when he knocked at the door, S taped a copy of the papers to the front door of the unit A resides in, and left another set of the papers downstairs with M, the manager. A challenges the sufficiency of the service. What result?

3. Plaintiff's attorney sends L, his legal assistant (paralegal) to serve process on V at V's farm. Nobody is there. In talking with neighbors L discovers that V is on vacation in Nova Scotia, but decides to leave the papers between the screen door and the locked wooden front door. When V returns, and responds to the suit, he challenges the service. What result?

4. I-Co., a large insurance company, retains counsel to defend D in a negligence case. Upon reading the complaint the attorney noticed that it charged negligence without specifying any circumstances. The attorney filed motion for a bill of particulars. A few weeks thereafter D came into counsel's office for an interview. D informed counsel that she had moved six months previously to Maryland, and only learned of the suit from the new owners of D's former Virginia house. The attorney files a motion to dismiss the action. What result?

5. The sheriff, having served process in a civil action in the county adjacent to the one in which he is employed, filed a return of service form that recited: "The defendant being sick in bed, I served the process upon his wife, who was also present. I explained to her that these were legal papers and that it was most important that she give them to her husband. She said that she would give them to him." Is the service valid?

6. In serving another complaint, the sheriff left the papers at the defendant's last known address. Is the service valid?

7. G, an avid gardener, wishes to build a greenhouse on his lot in a 270-home subdivision. The subdivision plat, however, purports to preclude owners from constructing free-standing buildings other than the main dwelling unit. G's counsel drafts suit papers challenging the validity of the subdivision restriction. G's counsel has the sheriff serve the dozen nearest lot owners personally. Then he seeks issuance of an

- 365 - order of publication to obtain jurisdiction over the other 258 lot owners in the subdivision. Should the order be granted?

8. M is a Maryland resident. Unbeknownst to her, she is named in a suit filed in Virginia in which service is achieved by an order of publication. a. She learns of the suit six months after its filing, upon efforts of the plaintiff to enforce a default judgment entered in the suit. Can she oppose the enforcement proceedings by appearing in the Maryland court through which enforcement is sought? Suppose she appears in the Virginia court and objects to continued enforcement of the judgment. What results? b. Same facts as part a, except the defendant does not learn of the suit until three years after the default judgment is entered, when plaintiff finally locates her and takes steps to start enforcing the judgment in Maryland. She appears in the Virginia court where the judgment had been entered and asks to be relieved from the judgment. What result?

9. M, the Maryland resident, is served personally by a Maryland sheriff on a case pending in Virginia. The case is baseless, M knows it, and M ignores the matter. A year later she learns that a default judgment was obtained in Virginia and that the plaintiff is seeking to have it enforced in Maryland. She appears in the Virginia court seeking relief from the default, and submitting affidavits and other proof conclusively demonstrating that there is no merit to the plaintiff's case. What result?

10. D, a Delaware resident, is served personally in Delaware on a personal injury suit pending in Virginia. a. Assume that the action proceeds to a judgment upon a jury verdict that defendant is liable for $1 million in compensatory damages, and $5 million in punitive damages. Is the recovery proper? b. Would it make any difference if, at the time defendant was personally served, plaintiff's counsel also caused a copy of the process to be delivered to the Secretary of the Commonwealth? c. Would it make any difference if the action were for divorce or support?

- 366 -

Chapter 7 Default

A. Introduction ...... 367 Rule 3:19 Default...... 368 B. Background on Default in Virginia...... 369 Problems with Defaults in Virginia Prior to 2006 ...... 369 C. Answer and Default Mechanisms in the New Rules...... 370 D. Timetables for Responses ...... 371 General Timetable...... 371 Failure to Plead...... 373 E. How to Avoid A Getting Into Default Under Current Practice ...... 375 Filing of a "Responsive Pleading"...... 375 Rule 1:9 Discretion of Court...... 377 F. Consequences of Default: Common Law and Today ...... 378 Chappell v. Smith...... 378 Consequences of Failure Timely to Respond – Today ...... 380 G. Efforts to Have the Default Set Aside...... 384 Relief From the Status of Being in Default ...... 384 Relief From Default Judgments – Within the First 21 Days ...... 385 Relief From Default Judgments More than 21 Days After Entry...... 391 Code § 8.01-428 Setting aside default judgments...... 392 Landcraft v. Kincaid...... 394 The "Independent Action'' for Relief from Judgment...... 398 Charles v. Precision Tune, Inc...... 399 NOTES on Charles and Beyond...... 402 Powell v. Beneficial Finance Company...... 404 H. Remedies for Undisclosed Judgments (Default or Otherwise)...... 407 Statutory Changes in General...... 407 Soldiers' & Sailors' Relief Act ...... 408

A. Introduction

Failure to plead within 21 days from service or after decision on preliminary motions, and pleas will place defendant in default. Williams v. Service, Inc., 199 Va. 326, 99 S.E.2d 648 (1957); Federal Realty v. Litterio, 213 Va. 3, 189 S.E.2d 314 (1972). Default in effect waives any right to jury trial, and disentitles defendant to notice of further proceedings (except 10 day notice under § 8.01-296(2)(b), mailing notice prior to entry of default). When there is a default, on the motion of plaintiff the court will issue judgment upon liquidated damages, or, if plaintiff demands, put the damage issues to a jury. See

- 367 - Rule 3:19. If service upon defendant was by posting or by service upon an agent, no judgment will issue unless a copy of the pleading is mailed to defendant at least 10 days before judgment. §§ 8.01-296(2)(b); 8.01-315. See Chappel v. Smith, 208 Va. 272, 156 S.E.2d 572 (1967); Funkhouser v. Million, 209 Va. 89, 161 S.E.2d 725 (1968). The key Rule of Court, which was completely redrafted in the 2006 Rules revisions, is as follows:

Rule 3:19. Default (a) Failure Timely to Respond.— A defendant who fails timely to file a responsive pleading as prescribed in Rule 3:8 is in default. A defendant in default is not entitled to notice of any further proceedings in the case, including notice to take depositions, except that written notice of any further proceedings shall be given to counsel of record, if any. The defendant in default is deemed to have waived any right to trial of issues by jury. (b) Relief from Default. — Prior to the entry of judgment, for good cause shown the court may grant leave to a defendant who is in default to file a late responsive pleading. Relief from default may be conditioned by the court upon such defendant reimbursing any extra costs and fees, including attorney's fees, incurred by the plaintiff solely as a result of the delay in the filing of a responsive pleading by the defendant. (c) Default Judgment and Damages. (1) Except in suits for divorce or annulling a marriage, the court shall, on motion of the plaintiff, enter judgment for the relief appearing to the court to be due. When service of process is effected by posting, no judgment by default shall be entered until the requirements of Code § 8.01-296(2)(b) have been satisfied. (2) If the relief demanded is unliquidated damages, the court shall hear evidence and fix the amount thereof, unless the plaintiff demands trial by jury, in which event, a jury shall be impaneled to fix the amount of damages. (3) If a defendant participates in the hearing to determine the amount of damages such defendant may not offer proof or argument on the issues of liability, but may (i) object to the plaintiff's evidence regarding damages, (ii) offer evidence regarding the quantum of damages, (iii) participate in jury selection if a jury will hear the damage inquiry, (iv) submit proposed jury instructions regarding damages, and (v) make oral argument on the issues of damages. (d) Relief from Default Judgment. (1) Within 21 Days. — During the period provided by Rule 1:1 for the modification, vacation or suspension of a judgment, the court may by written order relieve a defendant of a default judgment after consideration of the extent and causes of the defendant's delay in tendering a responsive pleading, whether service of process and actual notice of the claim were timely provided to the defendant, and the effect of the delay upon the plaintiff. Relief from default may be conditioned by the court upon the defendant reimbursing any extra

- 368 - costs and fees, including attorney's fees, incurred by the plaintiff solely as a result of the delay in the filing of a responsive pleading by the defendant. (2) After 21 Days. — A final judgment no longer within the jurisdiction of the trial court under Rule 1:1 may not be vacated by that court except as provided in Virginia Code §§ 8.01-428 and 8.01-623.

B. Background on Default in Virginia

In the past, the various policies which underlie the imposition of default judgments have made Virginia a jurisdiction where it is easy to fall into default, and very hard to get out. In the past the Supreme Court has noted that the Rules of Court concerning default judgments "were adopted in the interest of expediting the maturing and hearing of cases. A defendant is warned when he is served with process as to the time within which he must make his response. He may have an extension of that time if he makes proper application and shows reasonable cause therefor. Otherwise, the Rules are to be applied according to their terms."128 The countervailing policy favoring decision of cases on the merits had not been stressed in Virginia , at least where defaults are concerned. The 2006 reforms creating a new default rule for all civil cases go a long way toward establishing a fair, uniform, and easily understood system to deal with the problem of non-response in a system where the defendant cannot be allowed to thumb its nose at the responsibility of defending a case after proper service of process. However, after a judgment becomes final, the dramatic consequences of default remain applicable in Virginia practice. This section of the Readings lays out governing default principles, analyzes the new Rule of Court governing default and explores the expected application of the new principles.

Problems with Defaults in Virginia Prior to 2006

The Supreme Court has in the past repeated the mantra that in default situations the defendant is the architect of his own misfortune, importing a notion of defendant's fault, and dispelling the moral considerations favoring relieving a defendant from the predicament that defendant alone has caused. A major concern that has led to prior Virginia default doctrine – essentially making it extremely hard to obtain relief from default, is the deterrence policy. As some Virginia cases explained it in the past: "To relieve a defendant of the consequences of

128 Jackson v. Jackson, 236 Va. 199, 205, 372 S.E.2d 155, 159 (1988) (quoting Levine v. Lacy, 204 Va. 297, 302, 130 S.E.2d 443, 447 (1963).

- 369 - such conduct would be to encourage it. Diligence and vigilance would cease to be the rule, certainty in the result of judicial proceedings would be destroyed.130 In Virginia jurisprudence, a failure of the defendant to plead within 21 days from service, or within the applicable period for response after a decision by the trial court denying disposition of the action on preliminary motions and pleas, will place defendant in default. The general 21-day period for interposition of a responsive pleading was, prior to the year 1999 triggered by different events in "law" cases as opposed to "equity" proceedings, but in recent years has been based on the same standard, and the period itself has been identical in actions at law and suits in equity under prior Parts Two and Three of the Rules of Court. A single 21-day period applies in 2006 under the re-issued Part Three governing all civil litigation. Note that it has been assumed in the prior era that this period may be shortened by specific ruling of the trial court setting an earlier due date, and nothing in the new rule prohibits the court from setting a shorter period when circumstances require, although the wording of new Rule 3:8 seems to limit the trial judge's power in this regard to cases where pleas or motions have been interposed. Rule 3:8 provides in this regard: (b) Response After Demurrer, Plea or Motion. — When the court has entered its order overruling all motions, demurrers and other pleas filed by a defendant, such defendant shall, unless the defendant has already done so, file an answer within 21 days after the entry of such order, or within such shorter or longer time as the court may prescribe. Emphasis added. No similar provision appears in Rule 3:8(a) governing response time where a motion, demurrer or plea has not been interposed. As for extending the response period, Rule 1:9 clearly gives the trial court that power. It is only the shortening of a response date in this context that does not appear to be within the trial court's discretion unless some other pleading has been interposed in lieu of the answer in the first instance. Divorce or Annulment Suits. As under prior practice, in the single-form-of- action rules, where the relief sought is divorce or the annulling of a marriage, a default judgment is not permitted. This provision, formerly in Rule 2:8, and now maintained in Rule 3:19(c)(1) is intended to recognize the differences between divorce or annulment suits and other forms of litigation, whether traditionally legal or equitable. See Westfall v. Westfall, 196 Va. 97, 82 S.E.2d 487 (1954).

C. Answer and Default Mechanisms in the New Rules

As noted above, Rule 3:8 is the embodiment in the revamped Part Three rules of the basic response requirement imposed upon a defendant by the completion of service of process.

130 Id. (quoting Landcraft Co. v. Kincaid, 220 Va. 865, 874, 263 S.E.2d 419, 425 (1980).

- 370 - The specific default rule in new Part Three, Rule 3:19(a), is entitled "Failure Timely to Respond." It states: "A defendant who fails timely to file a responsive pleading as prescribed in Rule 3:8 is in default." This is a continuation of prior Virginia law on the effect of the mere failure to lodge the responsive pleading in a timely fashion.

D. Timetables for Responses

General Timetable. Note that under subsection (a) of Rule 3:8, the general procedure calls for the defendant to file pleadings in response within 21 days after service of the summons and complaint upon that defendant. By statute, if service is "waived" by the defendant a period of 60 days from the date of mailing of the waiver request will be afforded to the defendant in which to answer (90 of the defendant is outside the geographical boundaries of the Commonwealth). See Code § 8.01-286.1 Responsive Pleadings Defined. New Rule 3:8(a) defines the responsive pleadings that will operate to "meet" the 21-day time for a response as follows: "A demurrer, plea, motion to dismiss, and motion for a bill of particulars." Each of these will be "deemed a pleading in response for the count or counts addressed therein." Thus, under the new Rule, as under prior practice, if a defendant "files no other pleading than the answer," it must be filed within the basic 21-day period after service of process upon that defendant. Timetable After Other Filings. Subsection (b) of Rule 3:8 deals with the situation where a defendant has interposed a demurrer, plea or motion in the first instance, in lieu of lodging the answer itself. In that situation the Rule continues prior practice by requiring that there be a 21-day grace period that starts to run upon the entry of an order overruling the other pleadings that have been interposed. Rule 3:8(b) provides that "[w]hen the court has entered its order overruling all motions, demurrers and other pleas filed by a defendant, such defendant shall, unless the defendant has already done so, file an answer within 21 days after the entry of such order, or within such shorter or longer time as the court may prescribe." Under this provision in Rule 3:8(b) there is a standard, or automatic, launching of the 21-day period for filing an answer. That is, it is not necessary for the court in denying a plea or demurrer to expressly declare that a defendant's time to answer has started to run. Instead, by operation of law, upon the entry of the order disposing of the interposed filings, the time starts to run automatically. Thus, where a ruling is expected with respect to a plea or dispositive motion, or a demurrer, counsel for the defendant should take steps to assure that any ruling that denies relief against the complaint is promptly discovered, so that the short period for preparing and filing (not merely serving) the answer can be met. Note also that the option for the trial court to fix a different period for filing the answer appears only in subdivision (b) of Rule 3:8. Thus there is no power conferred

- 371 - under the Rules for the Court to shorten the period for response when there has been no special plea, motion, or demurrer lodged. Rule 1:9, which deals with deadlines under the pleading rules, likewise allows the court to extend timetables, but does not lay out any specific grant of authority for the trial judge to shorten the basic periods for response as established in other rules. Thus it appears that only in the situation where a plea or motion has been interposed can the court can take cognizance of the parties' submissions and perhaps presence at court proceedings to direct a shorter or longer period for filing a response as the circumstances appear to require. "Falling Into Default." Unlike most states, and the federal system, in which the plaintiff must involve the clerk of court in "noting" a default where court records show evidence of service and no record of the defendant's responsive pleading in the prescribed time, in Virginia the defendant simply lapses (or "falls") into default after the expiration of the 21st day following the completion of service. The day of service is not "counted" in Virginia practice, and hence the 21 day period starts the following day (whether or not that day is a Sunday). After midnight on the 21st day after service was completed, the defendant who has failed to submit an answer (or other responsive pleading) has fallen into default. This simple lapse of the defendant, without any application by the plaintiff, any certification by the Clerk of the Circuit Court, or any ruling or endorsement by the trial judge has drastic consequences. Default in effect waives any right to jury trial, and disentitles defendant to notice of further proceedings (except 10 day notice under § 8.01-296(2)(b), mailing notice prior to entry of default). The consequences with respect to objections against a plaintiff's damage proof are discussed below. Service by Publication. Prior law maintained that in suits begun by service achieved through publication, the complaint will not automatically be taken for confessed upon the expiration of 21. That provision of former Part Two of the Rules is not restated in the new Part Three procedures. An additional provision of the former rules, also illustrating the policy that publication service, being fictional in some sense, should have restricted consequences, provided that in such cases, evidence must be taken orally and reduced to writing. That provision also has not been carried forward into new Part Three of the Rules. Service by Posting or Service Upon an Agent. Where the service of process has been effected by the posting procedures contemplated in Code § 8.01-296(2)(b), notice ten days in advance must be provided before the entry of a judgment by default. Note, however, that under the current version of the cited statute, as amended, this notice provision has been largely eviscerated: At a minimum, the Code provides for an attempt at mail notice. In the current iteration of the Code section, however, the mailing is not required to be on the ``eve'' of the application for default but may, instead, be done routinely at the outset of proceedings shortly after the posting itself. In a little known analogue, a similar 10-day notice requirement is built into the Code of Virginia with respect to service upon an agent.133

133 Code § 8.01-315 provides: "No judgment shall be rendered upon, or by virtue of, any instrument in writing authorizing the acceptance of service of process by another on behalf of any person who is obligated upon such instrument, when such service is accepted as therein authorized, unless the person accepting service shall have made and filed with the court an affidavit showing that he mailed or caused to be mailed to the defendant at his last known post-office address at least ten days before such judgment is to be rendered a notice stating the time when and place where the entry of such judgment would be requested.

- 372 -

Failure to Plead

Case law, some of it rather colorful, holds that a responsive pleading means what it says. That is, neither filing a "notice of appearance," nor requesting more time to respond, nor responding to interrogatories, has the effect of filing an answer or a dispositive motion or plea. As a result, only one of the "safe harbors" will stop the clock and avoid having the defendant "fall into default" by not responding within 21 days of service. See, e.g., Jackson v. Jackson, 236 Va. 199, 372 S.E.2d 155 (1988). In Levine v. Lacy, 204 Va. 297, 130 S.E.2d 443 (1963), a case in which the Court was asked to set aside a default judgment, it we refused – pointing out that the Rules of Court concerning default judgments "were adopted in the interest of expediting the maturing and hearing of cases. A defendant is warned when he is served with process as to the time within which he must make his response. He may have an extension of that time if he makes proper application and shows reasonable cause therefor. Otherwise the Rules are to be applied according to their terms." On other occasions the Court has repeated the shibboleth that "the defendant had been the architect of his own misfortune" by allowing himself or herself to fall into default. In Landcraft Co. v. Kincaid, 220 Va. 865; 263 S.E.2d 419 (1980), the Court wrote that "[t]o relieve a defendant of the consequences of such conduct would be to encourage it. Diligence and vigilance would cease to be the rule; certainty in the result of judicial proceedings would be destroyed."

- 373 - - 374 - E. How to Avoid A Getting Into Default Under Current Practice

Filing a "Responsive Pleading."

Obviously, timely filing of a responsive pleading obviates a default. The question then becomes what the outer limits are in defining what a responsive pleading is for these purposes. At the outset it should be noted that Rule 3:8, the new provisions dealing specifically with Answers, Pleas, Demurrers and Motions, provides a list of the filings that will qualify as a responsive . Rule 3:8(a) provides in this regard: (a) Response Requirement. — A defendant shall file pleadings in response within 21 days after service of the summons and complaint upon that defendant, or if service of the summons has been timely waived on request under Code § 8.01-286.1, within 60 days after the date when the request for waiver was sent, or within 90 days after that date if the defendant was addressed outside the Commonwealth. Note that the Rule appears to be drafted in an inclusive fashion. That is, it specifies that the listed filings will qualify – it does not decree that no other form of filing will every qualify as a responsive pleading. Therein lie the seeds of future litigation. The categories expressly listed in Rule 3:8(a), and hence the "safe harbors" to be used by counsel wishing to avoid any contest over whether a responsive pleading sufficient to avoid default has been filed, are:

the Answer

A demurrer

A plea

A motion to dismiss, and

A motion for a bill of particulars.

ALERT: Rule 3:8 is specific that these listed devices serve as a responsive pleading for purposes of responding to service of the complaint, and avoiding default, "for the count or counts addressed therein." This means that only a demurrer to all counts in a complaint will obviate the need to answer the complaint. If some counts are subject to a plausible demurrer, but others are not, Rule 3:8 provides no shelter from the obligation to draft and file a timely answer with respect to the counts that are not demurrable. The same is true for the other mechanisms listed in Rule 3:8 – a plea or dispositive motion, or a bill of particulars, lodged as to some but not all of the claims in

- 375 - a plaintiff's complaint will not serve to exempt the defendant from the obligation to respond to the other claims One anomaly that carries forward in 2006 under the Virginia Rules of practice is that there is no rule defining a motion to dismiss. In federal practice under Rule 12, and in most states, there is an omnibus provisions collecting the various procedural defenses to be raised at the outset of a litigation, and providing a clear referent for such a term. However, in Virginia there is no comparable rule as yet, even under the 2006 single- form-of-action Rules. It seems clear that a venue motion (almost always for transfer) is not a motion to dismiss, but what distinctions may be drawn between jurisdictional, immunity, special defenses, and other "bars" to liability that may be asserted by motion is not spelled out in existing Virginia practice – either by rules or decisions of the Supreme Court. With respect to the range of pleadings or events that serve in lieu of an answer, prior case law interpreting similar provisions in the preceding rules and practice appears more broad than the current rule as of 2006. Again, this may be a reflection of the wording of Rule 3:8(a) as a form of "safe harbor" of clear cases where the maneuver works. But counsel should in every possible case use one of the listed steps from the new Rule, until it becomes clear through test cases involving someone else's client, that other steps will work to satisfy the responsive pleading requirement. Prior case law appears to hold that, in addition to the answer, pleas, demurrers and a motion for bill of particulars, the following have been recognized in prior years as responsive pleadings in lieu of an answer: a motion challenging the court's subject matter jurisdiction, any motion under Code §8.01-276.  a motion lack of an indispensable party (at least where dismissal is a remedy sought)  a motion challenging venue.144

Conversely, a number of items asserted by various defendants in prior case law have been found not to amount to a responsive pleading for default purposes. These include " (i) an affidavit of substantial defense filed in the course of removing an action from general district court to the circuit court,145 " non-dispositive motion papers " (ii) interrogatory answers,146

144 The motion to transfer venue may be a responsive pleading. See Hairston Motor Company v. Newsome, 253 Va. 129, 132, 480 S.E.2d 741 (1997) ("The defendants filed numerous responsive pleadings including substantially similar pleadings styled 'OBJECTION TO VENUE AND MOTION TO TRANSFER'"), see also Faison v. Hudson, 243 Va. 413, 417, 417 S.E.2d 302 (1992) (quoting Va. Code Ann. § 8.01-264(A)).

145 Jackson v. Jackson, 236 Va. 199, 372 S.E.2d 155 (1988).

146 Id.

- 376 - " (iii) papers removing a case from state to federal court.147

Obtaining Leave to File a Late Response. A party who cannot lodge a timely response is best advised to seek an extension of time to plead, either on consent or by motion to the trial court. Even if the time for response has expired, if a defendant is permitted extra grace time in which to lodge a responsive pleading, a default judgment will not follow. The trial judge has discretion to grant such leave to file an answer out of time.148 Indeed, Rule 1:9 seems expressly to permit the trial court to exercise this discretion.149

This general Rule of Court on discretion which lies in the trial court provides:

Rule 1:9. Discretion of Court. All steps and procedures in the clerk's office touching the filing of pleadings and the maturing of suits or actions may be reviewed and corrected by the court. The time allowed for filing pleadings may be extended by the court in its discretion and such extension may be granted although the time fixed already has expired, but the time fixed for the filing of a motion challenging the venue shall in no case be extended except to the extent permitted by § 8.01-264.

One limitation on this discretion was reviewed in a colorful case, where the court held that the trial court may not condition the granting of additional time to respond upon the defendant's filing of a bond to secure possible expenses of litigation or the ultimate judgment.150

147 Levine v. Lacy, 204 Va. 297, 130 S.E.2d 443 (1963).

148 See Chappell, 208 Va. at 273, 156 S.E.2d at 573.

149 See Williams v. Service, Inc., 199 Va. 326, 99 S.E.2d 648 (1957).

150 Lilienfield v. Baroff, 237 Va. 617, 378 S.E.2d 831 (1989).

- 377 - F. Consequences of Default: Common Law and Today

Only one aspect of the following case was displaced by the re-writing of the default Rule in 2006 (the doctrine precluding a defendant in default from objecting to evidence). The remainder of the serious problems befalling a defendant in default discussed below continue to apply:

CHAPPELL v. SMITH 208 Va. 272; 156 S.E.2d 572 (1967)

JUSTICE I'ANSON delivered the opinion of the court. James W. Smith, Jr., an infant, filed a motion for judgment, by his father and next friend, against Percy E. Chappell and Louis A. Chappell, defendants, to recover damages for injuries received, medical expenses and loss of wages as a result of the alleged negligence of the defendants in the operation of a motor vehicle. Service of process on the defendants was obtained through the Division of Motor Vehicles on October 27, 1965. No responsive pleadings or grounds of defense were filed by the defendants within 21 days after service of process, and defendants were in default. Plaintiff requested the trial court to empanel a jury to fix the quantum of his damages, and the matter was set for hearing on March 10, 1966. On March 3, 1966, counsel for defendants filed a motion asking leave to file responsive pleadings, which motion was denied. Defendants' several motions for a continuance were also denied. Since defendants were in default, the trial court ruled that . . . counsel could make no defense on the merits and their participation in the trial would be restricted to cross- examination of plaintiff's witnesses. The jury returned a verdict for plaintiff in the amount of $8,500, upon which judgment was entered, and defendants are here on a writ of error to the judgment. The facts relating to how the accident occurred are not material to the questions raised here and will not be stated. Defendants concede that . . . it was within the discretion of the trial court as to whether it would permit defendants to file pleadings after the expiration of 21 days from the date of service of the motion for judgment. Cooper v. Davis, 199 Va. 472, 476, 100 S.E.2d 691, 695 (1957). They contend, however, that the court [ruled improperly] in not allowing them to introduce evidence in mitigation of damages, to make objections to plaintiff's instructions, to offer instructions on the quantum of damages, and to address the jury. . . Thus the crucial question presented is whether or not the trial court erred in construing [the predecessor of Rule 3:19] by limiting defense counsel's participation in the trial on the quantum of damages to cross-examination of plaintiff's witnesses. The answer to defendants' contention is not found in any of our decisions interpreting [that Rule]. In Cooper defendant was in default and he was not permitted

- 378 - to make any defense on the merits. However, defendant's counsel was permitted without objection to argue the quantum of damages to the jury. We made no comment on the right of counsel to argue the question of damages to the jury under [the Rule] because this question was not raised. Under our present practice and procedure in actions at law, the effect of the failure of a defendant to plead within the time prescribed by Rule 3:5 is that he cannot defend on the merits of the case and he admits that plaintiff is entitled to recover some damages, however small. However, he does not concede the amount of damages on an unliquidated claim. [Rule 3:19] provides the procedure for ascertaining damages after defendant is in default. The Rule was intended to modify the common law and to be a substitute for the common law writ of inquiry of damages formerly provided. . . Where damages are unliquidated, [Rule 3:19] provides that the court or the jury shall hear evidence and fix the amount of damages. It does not specify, however, that the evidence heard is to be limited to plaintiff's evidence. The Rule specifically states that the penalties imposed on a defendant in default are as follows: (1) He is no longer entitled to notice of any further proceedings in the case. See, Levine v. Lacy, 204 Va. 297, 299-301, 130 S.E.2d 443, 445-446 (1963). (2) He waives trial by jury. (3) He waives all objections he might make to the admissibility of evidence. While the Rule specifically provides that defendant waives his right to make objections to the admissibility of the evidence, it is silent on the questions of a defendant's right to cross- examine the witnesses, to introduce evidence in mitigation of damages, to object to plaintiff's instructions, to offer instructions, and to address the jury. . . . The effect of the failure of a defendant to plead in a common law action was an admission by the defendant of plaintiff's right to recover some damages, but he did not admit the amount of unliquidated damages claimed. The entry of an order for the issuance of a writ of inquiry of damages was then required, and the only matter to be considered by the jury was the quantum of damages. M'Million v. Dobbins, 36 Va. (9 Leigh) 422 (1838); Petty v. The Frick Co., 86 Va. 501, 10 S.E. 886 (1890). Upon this inquiry of damages the defendant could call witnesses to show matters in mitigation of damages but not in bar of plaintiff's action on the merits. Burks Pleading and Practice, 3d ed., Rule Days and Office Judgments, § 49, pp. 98, 99; 10 Ency. Pl. and Pr., 1156- 1159; Graves, Notes on Pl. (new 92, 93). In Petty, supra, defendant was in default but no office judgment nor order of inquiry of damages had been entered. The case was tried as if the defendant were not in default. This court held that the proceedings were irregular and it was error to permit the defendant to cross-examine plaintiff's witnesses and demur to the evidence. The entry of a writ of inquiry of damages was not required in an action instituted by a notice of motion for judgment when a defendant was in default, because Rule Days and Office Judgments had no application. Plaintiff, however, was required to prove his quantum of damages in a proceeding which was considered in the nature of an execution of a writ of inquiry of damages. Wessel v. Bargamin, 137 Va. 701, 710-713, 120 S.E. 287, 290-291 (1923). The general rule is that on a hearing before a jury for the purpose of fixing unliquidated damages after default, the defendant may make no defense to the action on the merits, and unless prohibited by a rule of court or statute the defendant in most jurisdictions may introduce evidence to mitigate damages; he may object to plaintiff's

- 379 - evidence; he may cross-examine witnesses, but not for the purpose of interposing a defense on the merits; he may introduce witnesses in his own behalf, limited to the question of damages only; he may ask for instructions, object to instructions offered by the plaintiff, and address the jury. [Citations omitted] Rule 55 of the Federal Rules of Civil Procedure is similar in effect to our Rule [3:19]. In interpreting this Rule in the case of Peitzman v. City of Illmo, 141 F.2d 956, 962 (8 Cir. 1944), the Court said: On a hearing on the question of damages under Rule 55(b), a defendant though in default is in court on a hearing limited to the question of the amount of damages, to the same extent that he is in court in a trial on the merits. Since the purpose of a hearing on the quantum of damages is to aid the court or a jury in fixing the fair amount of damages plaintiff is entitled to recover, they can best discharge their duty by hearing all the evidence on the subject. Neither [the Rules] nor any statute prohibits counsel for a defendant in default from cross-examining plaintiff's witnesses, from offering evidence in mitigation of damages, from objecting to plaintiff's instructions, from offering instructions on the law relating to damages, and from addressing the jury. If the Rule was intended to restrict counsel for a defaulting defendant from participation in a trial limited to the question of damages, it would have contained language to that effect, as it did in providing that defendant waives his right to object to plaintiff's evidence. Hence, we are of opinion that it was error for the trial court to refuse to allow the defaulting defendants to participate in the trial on the question of damages to the same extent they would have been permitted if they were defending on the merits, except for the right to object to the admissibility of plaintiff's evidence, which is specifically prohibited under [Rule 3:19]. . .

[Editor's Note: Re-read Rule 3:19 above, which reflects the 2006 revision of pleading and practice. Notice that, today, there are different standards applicable at various stages of the default process, and the consequences of default are slightly different under this new rule. Objections by a defendant who is in default but appearing at the hearing, are today permitted.]

Consequences of Failure Timely to Respond -- Today

As the case above indicates, traditionally in Virginia, merely letting the 21 day answer period slip by has been the source of disaster. Beginning in 2006, Rule 3:19 ameliorates to some extent the most common situation – where there is a short delay in the defendant's proffering of a responsive pleading – technically missing the deadline. New Rule 3:19(a) states that failure timely to respond still has serious consequences in Virginia: "A defendant who fails timely to file a responsive pleading as prescribed in Rule 3:8 is in default." The disabilities that follow from the status of being in default under the current Rules are also specified in Rule 3:19(a). This portion of Rule states:

- 380 - A defendant in default is not entitled to notice of any further proceedings in the case, including notice to take depositions, except that written notice of any further proceedings shall be given to counsel of record, if any. The defendant in default is deemed to have waived any right to trial of issues by jury. Several aspects of this brief passage in the Rule are noteworthy, and should be spelled out. First, what does it mean for the Rule to state in one breath that a defendant in default is not entitled to notice of any further proceedings in the case, including notice to take depositions, but then to require "that written notice of any further proceedings shall be given to counsel of record, if any." Counsel of record is a concept defined in Rule 1:5: "Counsel of record " includes a counsel or party who has signed a pleading in the case or who has notified the other parties and the clerk in writing that he appears in the case. Counsel of record mayshall not withdraw from a case except by leave of court after notice to the client of the time and place of a motion for leave to withdraw. Thus if the default follows any point in the proceedings at which an attorney or the defendant pro se has signed a pleading, or given a notice of appearance in the case, the default provisions in Rule 3:19(a) require that notice of further proceedings – most pointedly, any court date for consideration of turning the "status" of being in default into a judgment – must be given to that person. Second, Rule 3:19(a) specifies that a defendant in default is deemed to have waived any right to trial of issues by jury. This is in accord with prior practice. Under the Virginia approach continued in the new Rules of Court, upon the occurrence of a default, the plaintiff will choose whether a jury is empanelled to hear the damage evidence, in any case where a right to a jury would normally be present. The result is that if plaintiff prefers to present the damage proof to the judge alone, the defaulting defendant will have no option to demand a jury even in those cases where the subject matter would normally be heard by a jury if the case were not in a default posture. The default is taken as a deemed waiver of jury trial rights, if any, which the defendant may have had in a properly pled case. Previously, in equitable actions, before a defendant was deemed "in default,'' attention was paid to whether service procedures made response ripe. Thus, if the defendant was served in the Commonwealth or has accepted service, the ordinary 21- day period applied and a defendant who has not interposed an answer or other response was in default. If service was by publication, the defendant was not "in default'' until the period specified in the order of publication for the protection of defendant's interests has expired. Even with these protections, the notion of being "in default'' does not require a court ruling or certificate by the clerk: it is, rather, a condition derived from checking dates and calculating response periods. These provisions have not been carried forward into the new Rules governing all civil cases. However, it seems clear that under the service by publication statute, Code § 8.01-316 a defendant in any case where service is made by the publication mechanism cannot be in default until the period for making the publication is completed and the date specified in the published notice has passed. Note that case law indicates that the court may specify the means of giving notice of contemplated default proceedings to parties, including the means for giving notice to unrepresented parties and those whose counsel have withdrawn. In cases where service

- 381 - of process was originally undertaken by mail through the Secretary of the Commonwealth under the long-arm statute, a second mailing may be used to satisfy the requirements of notice for a default hearing. Formerly, when there was a default in an equity suit, the bill of complaint was "taken as confessed'' and, in all suits other than actions for divorce or annulment of a marriage, set for disposition. The confession was deemed to prove all matters properly pleaded, and deprived party in default of notice of further proceedings. A "decree pro confesso'' was granted accordingly. In divorce and annulment actions, proof is still required despite the default. On paper at least, the prior rules provided for the automatic docketing of actions when the defendant fell into default, and ``the cause is set for hearing.'' under former Rule 2:8 At law, on the other hand, there was no provision for automatic docketing, and the rules contemplated a motion by the plaintiff to bring the matter on for entry of a judgment by default and, where damages are unliquidated, for a hearing to fix the amount of recovery. The new Rules on default do not specify the procedures to be used in hearing the default, setting damages, or framing the default judgment order. Prior case law is not superseded by the form of new Rule 3:19 on these points, and thus the procedures (and, unfortunately, some of the divergence and variation around the Commonwealth) with respect to resolving defaults into default judgments will likely continue. Generally, when there is a default, on the motion of plaintiff the court will issue judgment upon liquidated damages, or, if plaintiff demands, put the damage issues to a jury. The procedures and rights of the defendant to participate therein, merit brief discussion. Objecting to Plaintiff's Evidence. The new Rule does change one aspect of that case law, which applies in the situation where the defendant allows the case to fall into default, but appears in time to participate in the hearing (sometimes called an inquest) to determine the quantum of damages the plaintiff will recover. That outcome is changed in new Rule 3:19. In subsection (c)(3) of the Rule the rights (and disabilities) of a party in default are stated. Based on those aspects of the Chappell decision which have not been altered, and the express authorization of the new Rule, it is apparent that a defendant who makes an appearance in time to participate in the damage hearing may not offer proof or argument on the issues of liability – that issue is foreclosed by the default -- but may do several things:

(i) participate in jury selection if a jury will hear the damage inquiry,

(ii) object to the plaintiff's evidence regarding damages,

(iii) cross-examine witnesses called by the plaintiff,

(iv) offer evidence regarding the quantum of damages,

- 382 - (v) submit proposed jury instructions regarding damages, and

(vi) make oral argument on the issues of damages."

New Rule 3:19 thus reverses that part of the Chappell decision which barred a defendant in default from objecting to the plaintiff's damage proof. This is an important improvement in Virginia practice. Under a number of modern decisions, speculative expert testimony and other projections concerning damages, whether from "lost wages" or otherwise, is barred. Prior to 2006 a defendant in default was barred from making any objection to specious proof, even where it would never have met admissibility standards at a contested trial. Under new Rule 3:19, a defendant in default who participates in the damage hearing can do essentially everything that the defendant could do at trial, except offer proof or argument seeking to contest the issue of liability vel non. The liability issue is foreclosed by the fact of an un-relieved default.

- 383 - G. Efforts to Have the Default Set Aside

FIRST: Relief From the Status of Being in Default

New Procedures to "Undo" the Fact of Default. Rule 3:19 makes several major changes in default judgment practice in Virginia. First among these is the recognition of stages of default, and of the principle, which underlies the procedures in federal courts and every other states, that the earlier in the proceedings a defendant in default comes forward and expresses the desire to participate and defend the allegations in the case on the merits, the lower the standard should be in deciding whether to grant leave for that defendant to file a late answer. In Rule 3:19 today there are separate paragraphs setting forth differing standards for relief from unadjudicated, or technical, default, from those applied after the plaintiff has turned the "fact" of default into a judgment by default. Rule 3:19(b) provides: (b) Relief from Default. — Prior to the entry of judgment, for good cause shown the court may grant leave to a defendant who is in default to file a late responsive pleading. Relief from default may be conditioned by the court upon such defendant reimbursing any extra costs and fees, including attorney's fees, incurred by the plaintiff solely as a result of the delay in the filing of a responsive pleading by the defendant. The "good cause" standard is probably the most flexible one known to Virginia law, and any reason supporting the step of relieving a defendant's default will be sufficient. New Rule 3:19 thus avoids the more stringent tests used for some purposes in federal practice and in some other states, requiring "exceptional circumstances" or even "excusable neglect." No showing of excuse, or reason, or reasonableness of the defendant's conduct in falling into default is needed. Given the evident policy of the new Rules, which favor deciding cases on the merits rather than relying on procedural defaults and timing bars to determine the rights of Virginia citizens, any consideration which casts the defendant's conduct in a light other than a bald-faced effort to delay or obstruct the plaintiff, will likely be accepted as "good cause" under Rule 3:19. Focus on Harm to Plaintiff. The key "move" of the new provision is to focus the parties and the trial court on the fact that there is rarely any injury to the interests of the plaintiff that will be caused by a short delinquency in meeting the standard timetable for filing an answer. It is a rare case in which the plaintiff, in reliance upon a mere "technical" default (failure to answer in the calculated time, not yet converted into a default judgment in plaintiff's favor) causes the plaintiff to take any acts of reliance, or make any property decisions that have dramatic consequences. If there were some intervening crisis which came to a head shortly after the 21-day period for filing an answer passed, no doubt that situation would be considered by the trial court at the point when a defendant stepped forward and sought on "good cause" to be granted relief from default through the standard mechanism of an extension of time and leave to file an

- 384 - answer. More "good cause" might well be required of the moving defendant at that point. However, in the overwhelming majority of instances, the passage of a few days (or even a few weeks) between the prescribed due-date for filing an answer and the date on which a defendant actually proffers a late answer will not cause any detriment to the plaintiff other than the short delay itself, putting off commencement of discovery and trial preparations. As a result the policy embedded in Rule 3:19(b) is to direct attention to the most common consequence of the happening of a default – the taking by plaintiff of some steps to capitalize on the technical error and move the case toward a final judgment. It is for this reason that the new Rule provides that the court may grant leave to a defendant who is in default to file a late responsive pleading conditioned upon the defendant being required to reimburse any extra costs and fees, including attorney's fees, incurred by the plaintiff solely as a result of the delay in the filing of a responsive pleading by the defendant. Efforts undertaken by counsel to prepare the default judgment papers, and preparations solely engendered by the need to apply for the judgment, including hearing expenses, will be recompensed. However, the prior preparations, such as client interview time, investigation, drafting of the complaint, original service of process expenses and the like, are not compensable under this standard: those matters would have been required if there had been no default, they are standard burdens of preparing and initiating a lawsuit. Rather, it is only the default- related efforts triggered by non-response in the prescribed period which the trial judge is authorized by 3:19(b) to impose upon a defendant as a "condition" of obtaining an order permitting the service and filing of a late responsive pleading.

SECOND: Relief from Default Judgments Within the First 21 Days

Applications During the First 21 Days after Judgment. Prior to 2006, approaches to default judgments varied widely around the Commonwealth. In some circuits defaults were never relieved after the judgment stage, while in others a defendant's application for relief from a judgment was entertained, though the standards varied. Under the new Part Three of the Rules effective in 2006, there is a clear recognition that there is a cognizable procedure for seeking relief from default when the defendant tenders and appearance shortly after the entry of the judgment (within 21 days). The new Rule identifies a number of key factors that bear on the propriety of relieving the default vel non, and directs the trial judge to consider these factors in determining whether plaintiff has suffered any increase in attorneys' fees on account of the delay in the defendant's appearance and answer.

- 385 - Relief in the First 21 Days after Judgment. New Rule 3:19(d) provides authority for the trial judge to "relieve a defendant of a default judgment." It provides in this regard: (d) Relief from Default Judgment. (1) Within 21 Days. — During the period provided by Rule 1:1 for the modification, vacation or suspension of a judgment, the court may by written order relieve a defendant of a default judgment after consideration of the extent and causes of the defendant's delay in tendering a responsive pleading, whether service of process and actual notice of the claim were timely provided to the defendant, and the effect of the delay upon the plaintiff. Relief from default may be conditioned by the court upon the defendant reimbursing any extra costs and fees, including attorney's fees, incurred by the plaintiff solely as a result of the delay in the filing of a responsive pleading by the defendant. Several aspects of the new Rule deserve note. First among these is the fact that Rule 3:19(d) is linked to that most basic of Rules in Virginia practice, Rule 1:1 (the "21- day Rule"). Thus relief available under Rule 3:19 stretches no longer than the normal period during which a trial judge has power to suspend, vacate or modify a final order. This linkage, and the fact that even under the Rules of Court applicable in 2006 there is no definitive "Final Order" or "Judgment" document that unambiguously marks the final point in litigation, leaves open a particular problem in default judgment proceedings. In some parts of the Commonwealth it has been the practice of the circuit courts to enter a "final judgment on liability" by default, and then schedule the damage hearing for a later date, after which a "final, final judgment" incorporating the damage award is entered. The provisions of Rule 3:19 do not address this syncopated maturation of the judgment in default circumstances, but it seems clear that the "partial final judgment on liability" is not the last order to be entered at the trial level, and that the 21-day limit of Rule 1:1 (and hence now of Rule 3:19) is not triggered by the entry of a "judgment" that deals only with liability, and is expressly structured in the expectation that a further proceeding will be taken in the trial court, to fix damages. Thus the "last window of opportunity" for the trial court to vacate a default judgment will only start to run upon the entry of the completed judgment order, including both liability and damages, in a context where it is apparent that there are no further proceedings scheduled or contemplated in the trial court proceeding. That will mean, for those jurisdictions that may continue to bifurcate liability and damage proceedings in default cases, that the provisions of new Rule 3:19 will afford 21 days after the completed judgment is entered, rather than 21 days from the mere entry of a liability finding based upon default. Written Order Requirement. Rule 3:19(d) requires that there be a "written order" where the trial judge elects to relieve a defendant of default during this 21-day period after entry of the final judgment of default. The Rule does not require the trial court to make any particular findings, or to explain the reasons for its actions in any prescribed fashion. However, the new Rule does indicate that the judge may only do so "after consideration" of a series of articulated factors. For that reason, it would be appropriate, if it is not literally required by the text of the new provision, for the letter

- 386 - opinion or final order relieving a defendant of default (or declining to do so) to articulate reasons touching upon those factors. Rule 3:19(d) first identifies a necessary focus on "the extent and causes of the defendant's delay in tendering a responsive pleading." From this phrasing it is apparent that a defendant who steps forward with a fully-drafted responsive pleading shortly after the due date is more likely to be relieved than is one who does not appear for several months. This distinction is appropriate given the additional steps that are likely to be undertaken by a plaintiff in reliance upon a default judgment, as time passes. The quoted portion of Rule 3:19(d) also specifies the "causes" of the defendant's delay in pleading as an important factor. The Rule does not, importantly, state that a defendant who is "at fault" cannot be relieved from a default judgment. However, the various circumstances in which a party may fail to plead in a timely fashion run a wide gamut. A defendant who makes a conscious decision to default, and then inexplicably decides several months later that active defense is more appropriate, will receive under the standards of this rule less consideration than a defendant who has set up elaborate mechanisms for receipt and processing of papers served upon it, has a track record of responding timely to litigations over a period of years, and who happens through a fluke experience to lose or misplace a particular complaint. Incapacity, emergency, natural disasters, and other contexts may make one defendant less culpable than others. To repeat, however, the Rule clearly does not proceed from the premise that "any fault" is a barrier to being relieved. After all, the rule is dealing with applications that occur very promptly after the entry of the default judgment, and the opportunities for damage to a plaintiff from such short delay are limited. Whether service of process and actual notice of the claim were timely provided to the defendant is a further factor identified in Rule 3:19 as bearing on the trial court's decision to relieve a default judgment. Of course, if service of process was not properly performed, in most instances the judgment will be void and relief could be obtained, before and after the expiration of the first 21 days after judgment, pursuant to the provisions of Code § 8.01-428. And it clearly is not the mandate of new Rule 3:19 that anytime service was completed, the default will not be relieved. Rather, the focus of this aspect of the Rule is upon the issue of how conscious the defendant was of the pendency of an action against it, and of its obligation timely to respond in order to avoid a judgment being entered. The mission of the "summons" document that accompanies the complaint is precisely to warn a party being served of the solemnity of that event and the potential consequences if no response is timely lodged. Thus "actual notice" is a key factor in considering whether a default judgment under the new Rule should be relieved. Practitioners know that in some forms of "substituted service" under the Virginia statutes a plaintiff may comply completely with the requirements for valid service yet the defendant may not get actual notice. The validity of service in Virginia (when one moves away from "in hand delivery" modes of service of process, is not dependent upon actual notice reaching the defendant. There is also the "savings provision" of Code § 8.01-288 providing that service which actually reaches a defendant may be valid even if it is technically deficient under the required procedures specified by the Legislature. Again it bears stressing that Rule 3:19(d) is not prescribing that relief from default is not available when there was actual notice. Under this provision, whether or not the

- 387 - defendant actually knew about the action is a factor to consider, and by that very structure in the Rule it is shown that there are expected to be cases where the defendant actually had notice but for various reasons filed timely to file the answer or other responsive pleading. To the extent that the non-filing of a response was an intentional move on a defendant's part (which sometimes happens with out-of-state defendants who expect to contest personal jurisdiction of the Virginia courts in enforcement proceedings in their home states) the presence of "actual notice" is a factor counseling against relieving a default judgment. But many defendants will be able to show that they knew the papers were served and yet failed to appear in timely fashion to defend for less venal reasons, and therefore the trial judge may wish to relieve such parties of the judgment in order to facilitate defense and decision of the case on the merits. Effect on Plaintiff. Importantly, Rule 3:19(d) draws attention of the parties and the circuit court to the central question of "the effect of the delay upon the plaintiff. The sea-change incorporated into Rule 3:19 is a policy choice: that it is better to decide cases on the merits instead of by procedural defaults. It is better to hear the parties and decide on the facts, rather than to cause judgments because of lawyer-failings or other procedural defaults. Thus the new Rule requires "consideration" of the question of what injury befell the plaintiff because the defendant was late in meeting a fairly short, 21- day answer period. The reality of past Virginia practice was that when a defendant inadvertently fell into default the situation was, by operation of law, automatically and immediately a tremendous advantage for the plaintiff. Under the new Rule the focus is on the other side: what detriment has befallen a plaintiff that justifies forcing the action to be resolved by default instead of on the merits. In most cases, the primary – often the only – impact on a plaintiff by virtue of a defendant's defaulting in failing to file a timely answer is a small amount of attorneys fees incurred in taking the necessary steps to process that default into an enforceable judgment. In cases where there is a liquidated sum due under the allegations of the case, these efforts may be nothing more than drafting a proposed form of order or judgment, in a single page or two. In unliquidated circumstances, counsel may take the time to schedule, and perhaps as time draws near, to prepare for the damage hearing. Unless the plaintiff has relied on a default judgment to make some property decisions, or where other events have intervened to preclude the plaintiff from pursuing the action on the merits if the default is relieved, there is little reason to insist on enforcement of the default where the defendant has made a late appearance. An example of true prejudice is hard to imagine. One possibility might be where the default strings out the proceedings for an extra year, and a witness who could have testified for the plaintiff dies unexpectedly during that period. Another might be where the delay caused a plaintiff to lose some contractual, property or wills/estates rights that could have been exercised had the case been timely litigated. Short of those dramatic (and rare) instances where the plaintiff either (1) cannot litigate the case fairly because of some evidentiary or proof problem caused by the delay, (2) lost specific legal rights or options during the period of delay, or (3) cannot obtain relief in the delayed proceeding that would have been available had the case proceeded normally, there is no sound reason for refusing to relieve the defendant of the default.

- 388 - Conditions of the Order Relieving a Default. Recognizing that in almost all cases the plaintiff has suffered nothing more than "delay" (which will likely be taken into account in imposing damages and interest if plaintiff prevails on the merits) and possibly some "extra" attorney effort in implementing the default, new Rule 3:19 deals directly with the possible harassment and costs aspects of a defendant's failure to timely respond to a plaintiff's pleading. It provides: "Relief from default may be conditioned by the court upon the defendant reimbursing any extra costs and fees, including attorney's fees, incurred by the plaintiff solely as a result of the delay in the filing of a responsive pleading by the defendant." The wording of this cost-recoupment provision was carefully chosen. It is making a very important distinction between attorney effort and fees that would have been required in any case, and that which is extra, caused by the special problems of default. Thus, for example, this provision does not allow for recoupment of fees for the basic research and preparation of the Complaint, or other preparations that would have been required if the defendant had timely interposed an answer. Preparations for discovery, client fact finding, and legal research that are needed to commence the case are not "caused" by a defendant's delay and default in responding. Thus Rule 3:19 authorizes recovery by a plaintiff of the "extra" expenses occasioned solely by the default: time spent preparing papers for the default itself, participation in default hearings, and the like. This provision is not, in other words, a retrospective avenue for recovery of all attorneys fees in the case, contrary to the "American Rule" adopted in Virginia that each party normally pays its own counsel fees absent a statute or contract allowing cost- shifting.

- 389 -

- 390 - Relief From Default Judgments More than 21 Days After Entry

Once the trial court has issued its judgment, the trial judge retains jurisdiction to suspend, vacate or modify the judgment for only 21 days (counting the day after the judgment as the first of the 21 days). Revisions to the civil rules, and the creation of new Rule 3:19 do not alter this fundamental principal of subject-matter jurisdiction as applied to trial courts and final orders in Virginia practice. Rule 3:19(d)(2) expressly reflects the continuing supervening importance of the 21-day rule as embodied in Rule 1:1, and the statute discussed in this section, in explaining the source of any remedy for relief from default after 21 days has expired following the date of the judgment itself: (d)(2) After 21 Days. — A final judgment no longer within the jurisdiction of the trial court under Rule 1:1 may not be vacated by that court except as provided in Virginia Code §§ 8.01-428 and 8.01-623. The stringency, one is tempted to say stinginess, of the Virginia remedies for relief from a default judgment after the trial judge loses jurisdiction upon the expiration of 21 days make it very clear that the other provisions of Rule 3:19(b) and (d) discussed above should be used at every opportunity to "undo" the default early – before it is reduced to a judgment or during the first 21 days after entry of the judgment – because thereafter neither the governing statute nor the interpretive case law allows much room for relief. Most applications of this nature are unsuccessful, preserving default's role as one of the largest traps in Virginia practice. Once 21 days elapses after the entry of a default judgment, there are two basic procedures to obtain relief from the judgment once defendant learns of it (commonly upon attempted execution under the judgment or decree): a motion and a separate action. The motion procedure has been by far the most commonly employed. The independent lawsuit option has often been mentioned in earlier cases, but was finally defined in a 1992 decision which all but decimated the procedure. Motions for Relief from Default. Given the strong policy push in Virginia's prior case law to reach closure and finality in civil litigation – unlike the common practice in federal courts – default judgments have historically been upheld most of the time in Virginia practice, even when has proven difficult to pin down the culpability of the defendant for not responding. As the Supreme Court explained in McEwen Lumber Co. v. Lipscomb Brothers Lumber, 234 Va. 243, 360 S.E.2d 845 (1987)., there are policies favoring certainty in judicial proceedings are strong. As a result, the canon of construction for interpretation of the statute that governs motions for relief from default is one of strict reading, treating the exceptions to binding finality very narrowly.

- 391 - The Code provision governing relief from judgments, including those entered upon default, is §8.01-428. It provides:

§ 8.01-428. Setting aside default judgments, clerical mistakes, independent actions to relieve party from judgment or proceedings, grounds and time limitations A. Default judgments and decrees pro confesso, summary procedure. -- Upon motion of the plaintiff or judgment debtor and after reasonable notice to the opposite party, his attorney of record or other agent, the court may set aside a judgment by default or a decree pro confesso upon the following grounds: (i) fraud on the court, (ii) a void judgment, (iii) on proof of an accord and satisfaction, or (iv) on proof that the defendant was, at the time of service of process or entry of judgment, a person in the service of the United States for purposes of 50 U.S.C. app. § 502. Such motion on the ground of fraud on the court shall be made within two years from the date of the judgment or decree. B. Clerical mistakes. --Clerical mistakes in all judgments or other parts of the record and errors therein arising from oversight or from an inadvertent omission may be corrected by the court at any time on its own initiative or upon the motion of any party and after such notice, as the court may order. During the pendency of an appeal, such mistakes may be corrected before the appeal is docketed in the appellate court, and thereafter while the appeal is pending such mistakes may be corrected with leave of the appellate court. C. Failure to notify party or counsel of final order. --If counsel, or a party not represented by counsel, who is not in default in a circuit court is not notified by any means of the entry of a final order and the circuit court is satisfied that such lack of notice (i) did not result from a failure to exercise due diligence on the part of that party and (ii) denied that party an opportunity to pursue post-trial relief in the circuit court or to file an appeal therefrom, the circuit court may, within 60 days of the entry of such order, modify, vacate, or suspend the order or grant the party leave to appeal. Where the circuit court grants the party leave to appeal, the computation of time for noting and perfecting an appeal shall run from the entry of such order, and such order shall have no other effect. D. Other judgments or proceedings. --This section does not limit the power of the court to entertain at any time an independent action to relieve a party from any judgment or proceeding, or to grant relief to a defendant not served with process as provided in § 8.01-322, or to set aside a judgment or decree for fraud upon the court. E. Nothing in this section shall constitute grounds to set aside an otherwise valid default judgment against a defendant who was not, at the time of service of process or entry of judgment, a service member for purposes of 50 U.S.C. app. § 502.

Non-clerical Grounds. In a recent case, a clerical error was made by the trial judge, reversing the names of the plaintiff and the defendant in a judgment order. See State Farm Mut. Auto. Ins. Co. v. Remley, 270 Va. 209, 618 S.E.2d 316 (2005). "Clerical mistakes" under Code § 8.01-428( B) tend to be scrivener's errors, which are

- 392 - those which are "demonstrably contradicted by all other documents." Examples of such errors include a typographical mistake made by a court reporter in transcribing a trial transcript, counsel's failure to prepare an order for entry by the trial court, and a misstatement on the record by the trial court regarding the length of incarceration a defendant was ordered to serve. Most of the motions seeking relief from a default judgment, however, are not of the "clerical error'' type, but are attempts to set aside a default judgment on other grounds. There are only three "non-clerical" grounds specified in Code § 8.-1-428:

; fraud on the court,

; void judgment, and

; proof of an accord and satisfaction.

Of these, only the void judgment provision requires extended discussion here. Fraud upon the court has rarely been found and is not susceptible of the artful interpretations applied to determination of what is a "void'' judgment. Similarly few difficulties are encountered in averments where the parties had an accord and satisfaction resolving their claims prior to the default. In the leading case, Landcraft Co. v. Kincaid, set forth below, the Court reviewed several arguments proffered by the defendant against whom a default had been entered. Based on this discussion, the recognized voidness grounds appear to be limited to lack of subject matter jurisdiction, lack of personal (territorial) jurisdiction, absence of notice, and where the plaintiff's pleading fails to state a cause of action. Lack of personal jurisdiction through void service of process also results in a void judgment. Several arguments were advanced and rejected as additional grounds for declaring the judgment void and setting aside a default. The arguments that will not support a claim that the judgment should be vacated are: * that there are serious fact errors underlying the claim or the judgment * that defendant has a valid defense to the claim, * that defendant did not have notice of the claim, and * that defendant will suffer severe hardship from the default.

- 393 - LANDCRAFT CO. v. KINCAID 220 Va. 865; 263 S.E.2d 419 (1980)

In this appeal in an action at law for breach of contract, we review the trial court's action in setting aside a default judgment. On February 7, 1975, appellant Landcraft Company, Inc., the plaintiff below, filed its motion for judgment in the trial court against defendants Berlage-Bernstein Builders, Inc., and Donald M. Kincaid, both doing business as Kings Highway Associates Limited Partnership. Plaintiff sought damages approximating $ 24,000 for breach of a construction contract in which plaintiff agreed to install sewers and water mains in a subdivision in Fairfax County being developed by Kings Highway Associates. Plaintiff alleged defendant Berlage-Bernstein was a general partner and appellee Kincaid was a limited partner in Kings Highway Associates. Kincaid was personally served with the notice of motion for judgment on March 21, 1975; Berlage-Bernstein was served a week later and filed a timely "answer" and counterclaim. Kincaid filed no pleadings in response. Approximately a year later and pursuant to notice, plaintiff moved for a judgment against both defendants. Service of the notice was by mail upon counsel for Berlage-Bernstein and by mail upon Kincaid individually. On April 9, 1976, the return date of the notice, judgment was entered against the defendants jointly and severally for $ 17,559.99; the counterclaim was dismissed with prejudice. Counsel for Berlage-Bernstein endorsed the judgment order and did not object to its entry. Kincaid had failed to plead or otherwise appear and the judgment against him was by default.. . . Almost ten months later on February 8, 1977, Kincaid, by counsel, filed a motion to "reverse" the default judgment. He initially alleged that neither the construction contract, the Certificate of Partnership for Kings Highway Associates, nor the applicable sections of the Uniform Partnership Act, Code §§ 50-1 to -78, imposed any liability upon him to plaintiff as a limited partner. He contended that under Code § 50- 44, "limited partners are not responsible for the debts of the partnership." He also asserted that under Code § 50-69, "limited partners are not proper parties in a suit against the partnership, unless the object of the suit is to enforce a limited partner's liability to the partnership." Consequently, Kincaid alleged, the entry of the default judgment was a "mistake" from which he was entitled to relief. . . In a supplemental memorandum of law filed three months after the foregoing motion, Kincaid assigned an additional reason why the default judgment ought to be reversed. He asserted that he had sold his limited partnership interest in 1970 and that such sale became a matter of public record at least eight months before the construction contract was executed on November 29, 1971. Consequently, Kincaid contended, plaintiff's motion for judgment alleging he was a limited partner in Kings Highway Associates at times material to the claim was "clearly defective as a matter of law." In May of 1977, the trial judge wrote to counsel stating that the motion to reverse the default judgment was granted. The court said that because Kincaid was not a member of Kings Highway Associates Limited Partnership on November 29, 1971, he could not be held liable "as a limited partner or as a general partner with respect to a contract entered into on that date. . . ."

- 394 - As a general proposition, a default judgment is valid if the trial court had territorial jurisdiction, subject-matter jurisdiction and if adequate notice has been given to the defaulting party. Restatement (Second) of Judgments, Introductory Note at 20 (Tent. Draft No. 6, 1979). But one of the bases upon which such a judgment may be invalidated is when the motion for judgment fails to state a cause of action; under such circumstances, "that failure is held to disable the court from entering a valid default judgment." Id., § 113, Comment d at 24. . . The foregoing principle stems from the proposition that courts may not properly on their own accord set themselves in motion. They have no power to adjudicate issues which are not presented by the parties in their pleadings unless the parties voluntarily try an issue beyond the pleadings. Such a judgment beyond the issue is not merely irregular, it is extrajudicial and invalid. 1 Freeman [on Judgments] §355 at 737-39. Consequently, our immediate inquiry on this branch of the case is to determine whether the pleading adequately supports a cause of action. . . . It will be recalled that the trial court initially ruled Kincaid could not be held liable for plaintiff's claim because he was not a member of the partnership on the date of the construction contract. From the record we cannot determine the basis for that finding of fact by the trial judge; it apparently was premised on copies of documents filed as an exhibit with Kincaid's memorandum of law in support of his motion to set aside. The copies were attested by the clerk of the trial court, the originals having been admitted to record by the clerk in March of 1971. They included what purports to be an amendment of the certificate of limited partnership by which Kincaid sold his interest in Kings Highway Associates. On appeal, Kincaid embraces this alternative holding and argues that the "serious factual misstatement" in the motion for judgment as to Kincaid's status as a limited partner on the date of the contract "was properly considered by the trial court in the Motion for Reversal of Default Judgment." . . . In response, plaintiff argues that [the Code] "does not permit a defendant in default to set aside the judgment against him by alleging facts which, if proven, would constitute a defense to the original pleadings." Landcraft points out that Kincaid has not asserted any excuse for his failure to file responsive pleadings and, given the narrow construction this Court has applied to § 8- 348 [the predecessor to present § 8.01-428], the trial court erred in vacating the default judgment when defendant had been personally served and when plaintiff had strictly complied with all of the formalities of this Court's rules of pleading in civil actions. We agree with plaintiff. . . The [portion of the statute now contained in § 8.01-428(B)], insofar as pertinent here, permits correction of certain clerical errors appearing on the face of the record. See Shipman v. Fletcher, 91 Va. 473, 488-89, 22 S.E. 458, 463-64 (1895); Davis v. Commonwealth, 57 Va. (16 Gratt.) 134, 135, 137 (1861). Although Kincaid initially based his motion to set aside upon "a mistake cognizable within the provisions" of [the Code], he correctly does not argue that a clerical mistake has occurred; rather, he relies on the first [section] of the statute. Consequently, in reviewing the trial judge's ruling on this aspect of the case, the question is whether, independently of the issue discussed in the first part of this opinion, there was error in the default judgment for which this Court could reverse the judgment. We conclude there was not. There was full compliance by plaintiff with each procedural requirement leading to the judgment by default. The motion for judgment was properly filed in the clerk's

- 395 - office below and process duly served six weeks after the action commenced. There can be no question the notice of motion for judgment amply notified Kincaid of the consequences of a default. The notice, to which was attached the motion for judgment, stated, in accordance with Rule 3:3: You are hereby notified that unless within twenty-one (21) days after service of this Notice of Motion for Judgment on you, response is made by filing in the Clerk's Office of this court a pleading in writing, in proper legal form, judgment may be entered against you by default without further notice. Kincaid, for a reason not explained in the record, failed to plead or otherwise appear. Under [the] Rules he was in default when he failed to timely file responsive pleadings. After Kincaid became in default, plaintiff went beyond the [then applicable] requirements . . . and gave Kincaid notice by mail that a judgment by default would be sought. There was still no appearance by Kincaid and the judgment was entered based, as we have said, upon proceedings which were free of any irregularity. Under Rule 1:1, the judgment remained under the control of the trial court and was subject to be modified or vacated for 21 days after the date of entry, and no longer. In Litterio, supra, the defaulting party was denied relief under [the predecessor of Code § 8.01-428] under circumstances similar to those in this case. There, the defendant corporation had been properly served through its registered agent and failed to plead. Seven months after entry of a default judgment, defendant filed a motion to set aside, relying on the statute. In a supporting affidavit, defendant alleged that plaintiff had sued defendant in a federal court on the same claim, which had been actively defended, and that defendant's counsel learned of the default judgment about a month after entry, at a time when plaintiff had moved to dismiss the federal action without prejudice. This Court, noting compliance with the procedural requirements preceding the judgment, said that it would have no ground for reversing the judgment and that the trial court properly refused defendant's motion to set aside. . . . In the present case, Kincaid waited too long to mount his defense. After the fact of the default judgment the trial court could not properly consider evidence, by judicial knowledge or otherwise, and find the factual allegations of the original pleading inaccurate. Hardship may have resulted from the unexplained failure of Kincaid to promptly respond to pleadings which imposed upon him a substantial monetary burden. But he was the architect of his own misfortune. To relieve a defendant of the consequences of such conduct would be to encourage it. Diligence and vigilance would cease to be the rule; certainty in the result of judicial proceedings would be destroyed when, due to the complexities of modern-day business, "a high degree of finality" must attach to judgments. Powell v. Beneficial Finance Co. of Lynchburg, 213 Va. 647, 649, 194 S.E.2d 742, 745 (1973); Hill v. Bowyer, 59 Va. (18 Gratt.) 364, 385 (1868). Consequently, this Court would have had no ground for reversing the default judgment and the trial court erred in setting it aside. . . For the foregoing reasons, the order of the court below will be reversed and the default judgment entered April 9, 1976 will be reinstated.

- 396 -

- 397 - The "Independent Action'' for Relief from Judgment.

Subsection (D) of Code §8.01-428 states that the section "does not limit the power of the court to entertain at any time an independent action to relieve a party from any judgment or proceeding, or to grant relief to a defendant not served with process as provided in §8.01-322, or to set aside a judgment or decree for fraud upon the court.'' In several decisions counsel have "moved" for relief from a default and attempted to escape the limitations of Code §8.01-428(A) and (B) by arguing that a broad equitable power conferred in subsection (D) of the statute authorizes vacating of a default on other equitable grounds. The Supreme Court, however, held in that a motion filed as a part of the case in which the judgment or decree was entered is not an independent action as contemplated under subdivision (D) of this code section. It is firmly established that subdivision (D) does not create any new grounds for relief from a judgment or decree, but simply works to preserve the pre-existing common law right to seek such relief. Several decisions over the years left unresolved what the contours of such an independent action might be except for the fraud aspect, which appears to be the independent analogue of the grounds for a motion under subdivision (A) of the statute, and the service of process reference where the publication statute creates a window of two years in which a person served by that means may apply to have the action reopened, as provided in Code §8.01-322. Under this section, a one-year period will apply if the publication was supplemented by other service of the types therein described. The Supreme Court finally addressed the residual question of what elements are required and what grounds are recognized for the "independent action'' to obtain relief from judgment in Charles v. Precision Tune, Inc., set forth below. There the court adopted the definition of this cause of action found in a 1903 decision of a Midwestern federal appellate court. A combination of the factors required under this definition greatly limit the possibilities for using the independent action in equity.

- 398 -

CHARLES v. PRECISION TUNE, INC. 243 Va. 313, 414 S.E.2d 831 (1992)

JUSTICE HASSELL delivered the opinion of the Court: In this appeal, we consider the application of Code § 8.01-428(D) which permits a party to file an independent action to set aside a default judgment. In March 1990, Mary E. Charles filed a motion for judgment against Precision Tune, Inc. She alleged that she had incurred personal injuries and property damage as a result of Precision Tune's negligence and breach of warranties related to work performed on her car. The motion for judgment was served upon Anita K. Blair, the registered agent and vice president of Precision Tune. Ms. Blair forwarded the motion for judgment to Precision Automotive, Inc., which is a franchisee of Precision Tune. Ms. Blair informed an employee of Precision Automotive that "you should look into this matter immediately and contact us in order that we can coordinate responses." Jerry M. Veltmann, Precision Automotive's corporate counsel, replied to Ms. Blair by letter stating that Precision Automotive "will be retaining a lawyer . . . to defend on this action and to substitute Precision Automotive for Precision Tune." In March 1990, a lawyer trying to solicit Precision Tune's business, informed Mr. Veltmann by letter, "I note that one of the matters in question may require action to vacate a judgment, and the time within which you must act to do so under Virginia law is limited." In April 1990, the lawyer again wrote a letter to Mr. Veltmann and informed him that no action had been taken to defend Ms. Charles' motion for judgment. Counsel was not hired to defend the action. Responsive pleadings were not filed, nor was Precision Automotive substituted as a defendant for Precision Tune. Ms. Charles filed a motion for default judgment, and the court held a hearing on the motion and heard evidence. The court entered a judgment in favor of Ms. Charles for $ 1,809.35 for property damage to her car, and $ 10,931.00 for her personal injuries, plus costs. In August 1990, Ms. Charles filed a garnishment summons in which she sought to garnish $ 13,182.68 from a bank account owned by Precision Tune. Precision Tune then filed a "Motion to Set Aside Default Judgment and to Quash Execution." Precision Tune also filed a bill in chancery "seeking to set aside the default judgment on grounds of equity and fairness under Virginia Code § 8.01-428(A) and (D)."

- 399 - The trial court entered an order which consolidated the original proceeding, the garnishment proceeding, and the bill in equity. Precision Tune argued that it was not a proper party to Ms. Charles' personal injury action because its franchisee, Precision Automotive, which is a separate corporation, committed the acts which Ms. Charles alleged constituted negligence and breaches of warranties. The court held that Code § 8.01-428(D) conferred upon it the power to set aside a default judgment in an independent action "under the circumstances where equity requires it." The court set aside the default judgment and ordered an award of attorney's fees to Ms. Charles' counsel. We awarded Ms. Charles an appeal. Ms. Charles argues that Code § 8.01-428(D) does not confer a general grant of power upon a trial court to set aside a default judgment. Precision Tune argues, however, that Code § 8.01-428(D) grants the trial court broad discretion to exercise its equity powers and permits "a court of equity to relieve a party from any judgment in an independent action." [The Court then quoted Code § 8.01-428.] We have stated, on several occasions, that the language contained in paragraph [D] must be given a narrow construction because "judicial proceedings must have a certainty of result, and a high degree of finality must attach to judgments." Byrum v. Lowe & Gordon, Ltd., 225 Va. 362, 365, 302 S.E.2d 46, 48 (1983). Code § 8.01-428 specifies the remedies and procedures available to a party who seeks to have the trial court set aside or correct an error in a judgment. Paragraph A of the statute permits a party to file a motion to challenge a judgment by default or decree pro confesso for certain limited prescribed reasons: fraud on the court, a void judgment, or proof of an accord and satisfaction. Paragraph B permits a party by motion or the court, at its own initiative, to correct clerical mistakes in judgments or other parts of the record and errors therein. Paragraph [D], which is the subject of this appeal, does not create any new rights or remedies, but merely preserves a court's inherent equity power to entertain an independent action. Gulfstream Building Associates v. Britt, 239 Va. 178, 182, 387 S.E.2d 488, 490 (1990); McEwen Lumber v. Lipscomb Bros. Lumber, 234 Va. 243, 248- 49, 360 S.E.2d 845, 848 (1987). This construction of Code [§ 8.01-428(D)] is consistent with the Revisers' Note which states: A court's inherent equity power to entertain an independent action to relieve a party from any judgment has been preserved. The elements of this independent action in equity are: (1) a judgment which ought not, in equity and good conscience, to be enforced; (2) a good defense to the alleged cause of action on which the judgment is founded; (3) fraud, accident, or mistake which prevented the defendant in the judgment from obtaining the benefit of his defense; (4) the absence of fault or negligence on the part of the defendant; and

- 400 - (5) the absence of any adequate remedy at law. National Surety Co. of New York v. State Bank of Humboldt, 120 F. 593, 599 (8th Cir. 1903) (decided before adoption of Federal Rules of Civil Procedure). Applying these principles, we hold that the trial court erred by setting aside the default judgment. A party who suffers a default judgment and files an independent action may obtain relief only by proving all of the necessary elements, including "fraud, accident, or mistake" which prevented him from obtaining the benefit of his defense. However, the evidence in this case fails to establish "fraud, accident, or mistake." Precision Tune's "repair order" for the work performed on Ms. Charles' car refers to the location where the repairs were performed as a "Precision Tune center." The repair order, which contains numerous references to certain obligations that Precision Tune agreed to perform, states "Precision Tune shall not be liable for incidental or consequential damages (for other than injury to the person) resulting from breach of this written warranty or any other implied warranty." The repair order also directs customers who have questions about warranty information to contact Precision Tune at its Sterling, Virginia location. Hence, Precision Tune might have had some liability to Ms. Charles. Thus, based upon the record before this Court, we reject Precision Tune's contention that it was not a proper party. Furthermore, as noted previously, it is a fundamental principle of equity jurisprudence that a litigant who files an independent action in equity to set aside a judgment must be free of fault or neglect. National Surety, 120 F. at 599. The trial court found that even though Precision Tune believed that Ms. Charles had filed its motion for judgment against an improper party, no one ever informed her or her counsel. The court stated: "I do not agree . . . that Precision Tune is an innocent third party. It is the author of its own misfortune." This finding is fully supported by the evidence. Accordingly, we will reverse that part of the judgment of the trial court which set aside the default judgment Ms. Charles obtained against Precision Tune, and we will reinstate the final judgment entered against Precision Tune. We will affirm that part of the final judgment which awarded attorney's fees to Ms. Charles because Precision Tune did not assign error to that portion of the judgment. We will remand this case to the trial court for any further proceedings that may be necessary.

Editor’s Note: Defendant Precision Tune advertises using a traveling barbershop quartet called, you guessed it, the Precision Tunes:

- 401 - Notes on Charles and Beyond

After repeating all of the restrictive notions listed above, note that the court in Charles held that the elements for the independent action in equity as contemplated under Code § 8.01-428(D) are several: (1) a judgment which ought not, in equity and good conscience, to be enforced, (2) a good defense to the alleged cause of action on which the judgment is founded, (3) fraud, accident, or mistake which prevented the defendant in the judgment from obtaining the benefit of his defense, (4) the absence of fault or negligence on the part of the defendant, and (5) the absence of any adequate remedy at law. All of these elements are required for the claim to succeed as the Court says: "A party who suffers a default judgment and files an independent action may obtain relief only by proving all of the necessary elements, including 'fraud, accident, or mistake' which prevented him from obtaining the benefit of his defense.'' In the Charles case itself, the court found no sufficient showing of fraud, accident, or mistake, apparently because there was a possible theory under which the corporate party could have been held liable. This suggests that it will be very difficult for a defaulting defendant to show mistake or accident in the future. Second, the court emphasized that the fourth numbered requirement is also a fundamental premise: "it is a fundamental principle of equity jurisprudence that a litigant who files an independent action in equity to set aside a judgment must be free of fault or neglect.'' (again citing only the 1903 federal decision for this requirement). In the case at bar, the court found that the defendant initially served was at fault for not contacting plaintiff to inform her that she had sued the wrong party. "Accordingly,'' the vacating of default was not available. Charles, therefore, announced a narrow construction of the "independent action" option for seeking relief from a default judgment, and gives great weight to the goal of providing a high degree of finality for Virginia judgments, a policy mentioned in Charles and cited repeatedly in earlier decisions. More startling than the Charles decision itself, perhaps, is the application of this decision in a more recent case where the defendant was a large organization which had both a structure to make sure that process was timely attended to, and a history of making timely responses to all prior lawsuits. In Media General, Inc. v. Smith, 60 Va. 287, 534 S.E.2d 733 (2000), a plaintiff sued another driver for negligence, and adding the corporate party defendant, asserting that at the time of the accident the driver was acting in the scope of his employment for the corporation. Plaintiff served the general counsel and registered agent for the defendant corporation. The defendant corporation did not file any pleadings in response. The circuit court entered a default judgment against the corporation and awarded damages against it. The defendant corporation thereafter filed a bill of complaint pursuant to Code §8.01-428(D) seeking to set aside the default judgment entered against it. The trial court dismissed the bill of complaint, finding that the corporation was not free from fault or negligence in failing to respond to the motion for judgment. In Media General, the Supreme Court noted that the defendant corporation had the burden to produce evidence showing that it was neither at fault nor negligent. The evidence of record showed only that it had a system for responding to complaints, but

- 402 - that the system failed in this instance. The defendant did not provide any showing as to how or why the system failed and, thus, provided no evidence that the corporation was free from fault or negligence when it did not respond to the plaintiff's motion for judgment. These cases, therefore, present a clear reminder that the General Assembly has not incorporated an "excusable neglect" standard into Code §8.01-428. Rather, the statute as applied by the Court adheres to the rule that principles of certainty and finality of judicial proceedings. Accordingly, a "negligence or fault" standard is applied to determine whether a defendant will be relieved from a default judgment under the statute. The Court specifically rejected the assertion by the defendant that "equity and good conscience'' counseled in favor of relieving if of the default judgment: where there is "fault," the Court held, it is not even necessary to consider whether the defendant has shown that enforcing the judgment is inequitable or unconscionable. Finally the defense wins one. In Ryland v. Manor Care, Inc., 266 Va. 503 (2003), after two nursing home entities were served with process in a medical malpractice proceeding, and their insurer was notified, several attorneys were contacted with the assignment to prepare responsive pleadings, but no final commitment from counsel was obtained. As the adjourned date for responding neared, the office of another attorney reported in writing that it would undertake to file responsive pleadings on time. However, that counsel subsequently discovered an ethical conflict that precluded undertaking the engagement. The conflict was not reported to the defendants or their insurer until three days after the responsive pleadings were due. New counsel was retained, and a motion to be relieved of the default was filed in the malpractice action, along with an independent suit in equity for relief from the default. The trial court heard evidence ore tenus, and entered an order relieving defendants of the default. The Supreme Court affirmed the relief from default, finding that because this mistake impacted the attorney's ethical responsibilities, it was “not akin to an attorney's error about a filing deadline or the negligent failure to file a pleading by a certain date.” The Court found the record sufficient to support the circuit court's implied finding that both the insurer and the defendants were free from fault or negligence during the critical period: “Given the written communication from the attorney's office advising that he would file responsive pleadings, it cannot be said that either the insurer or defendants were negligent by failing to make further inquiries at that time.” The Court distinguished Media General, discussed above, as follows: there “the evidence showed only that a system put in place by the defendant to receive and respond to service of process had failed, but there was no evidence explaining how or why the system had failed. Thus, there was no evidence that the defendant was free of fault or negligence when it did not respond to the motion for judgment.” Finally, the Court also stated that a trial court must articulate its findings with particularity regarding each of the five elements of the applicable test. “Because of the need to have finality and certainty with regard to judgments, a trial court's decision to set aside a default judgment is a significant action and must, therefore, include its consideration of and findings with regard to all the necessary elements.”

- 403 - POWELL v. BENEFICIAL FINANCE COMPANY 213 Va. 647, 194 S.E.2d 742 (1973)

JUSTICE CARRICO delivered the opinion of the court. David E. Powell appeals from a final decree sustaining a demurrer to and dismissing his bill of complaint filed against Beneficial Finance Company of Lynchburg, Inc. The sole question for decision is whether the trial court erred in sustaining the demurrer. The case made out by the bill of complaint and the exhibits will be stated in narrative form. Powell lived in the city of Lynchburg, and two daughters, Katherine Elaine and Cheryl Ann, resided with him. On April 15, 1969, Katherine went to the office of Beneficial in Lynchburg and there negotiated a loan of $1,000.00. She executed a monthly payment promissory note for $1,269.84. She forged Powell's name and signed her name as witness to his purported signature. The sister, Cheryl Ann, also executed the note. Later, in January, 1971, after Katherine had married one Dowdy and had moved from the Powell home, Beneficial secured a civil warrant against Powell, Katherine, and Cheryl Ann in the County Court of Campbell County seeking to recover on a debt of $758.65 due "by Note." The sheriff served process on Cheryl Ann at the Powell home and also on Powell by delivering a copy of the summons to Cheryl Ann, he being absent at the time. Process was served on Katherine at her home. The warrant was returnable to February 17, 1971, and on that date a judgment was entered against all three defendants in the sum of $729.45 with interest and costs. Powell "had no knowledge and was entirely ignorant of the circumstances affecting him" in the service of process, and the entry of the judgment was "entirely unknown" to him "at that time." In February, 1971, Beneficial secured a "writ of garnishment" from the County Court of Campbell County, and it was not until Powell was "called" by his employer that he knew of the "writ of garnishment," the promissory note, the forgery of his name, and the default judgment against him. He then went to the office of Beneficial and informed its agent that he "had not signed any promissory note." He "ordered" the agent "to have the writ of garnishment dismissed immediately." Beneficial did not act to correct the fact that "it had got a default judgment on a forged obligation" but, instead, had two further "writs of garnishment" issued, the last returnable to October 4, 1971. A total of $629.28 was withheld from Powell's wages in the three garnishment proceedings. All this resulted in Powell's previous "good credit rating" being "disastrously affected." Powell's bill of complaint, filed October 19, 1971, prayed that Beneficial be enjoined from further issuance of "writs of garnishment" on the judgment; that Beneficial be required to release the judgment; and that Powell be awarded compensatory and punitive damages against Beneficial and Katherine Powell Dowdy, who was also made a party defendant to the bill. In sustaining the demurrers filed by Beneficial and Katherine, the trial court dismissed the bill as to Beneficial and transferred Powell's claim against Katherine to the law side of the court. We are not concerned in this appeal with the claim against Katherine.

- 404 - Beneficial contends that the sheriff's return, showing service of process upon Powell in one of the modes prescribed by law, imports an absolute verity and cannot be impeached. There is no allegation by Powell, Beneficial argues, that it fraudulently procured or induced the return, and he is not, therefore, entitled to equitable relief from the judgment on the ground that no process was served on him. Beneficial relies upon our decisions in Caskie v. Durham, 152 Va. 345, 147 S.E. 218 (1929), and Preston v. Kindrick, 94 Va. 760, 27 S.E. 588 (1897), for the proposition that an officer's return imports an absolute verity, barring equitable relief to a default- judgment defendant who claims that no process was served on him. We have no quarrel with this rule. It is a proper one, enunciated in the interest of bringing some finality to judgments. But it is not controlling here. Powell makes no attack upon the service of process in this case. He does not claim that process was not served exactly as the sheriff's return shows. He accords the record absolute verity. What he offers to show is that although process was served as the return states, the fact of service was withheld from him until after the default judgment was entered. This is not to alter, vary, or contradict the record, but to explain it. Beck v. Semones' Admr., 145 Va. 429, 436-37, 134 S.E. 677, 679 (1926). And Powell wants also to show that because the fact of service was withheld from him, he had no opportunity to prevent entry of judgment against him upon a forged instrument. Our research discloses that at an earlier date in our jurisprudence, one in Powell's position would have been entitled to equitable relief merely by showing that he had been prevented by mistake or accident from defending a cause where a default decree was entered, the mistake being as to the day of the session of court and the accident being his own misfortune in injuring his knee. Erwin v. Vint, 20 Va. (6 Munf.) 267, 270- 71 (1819). Or, he could have secured equitable relief from a judgment, whether default or not, by showing that it was based upon a forged instrument, of which he did not have proof at the time of trial. Marshall v. Holmes, 141 U.S. 589, 596 (1891); West's Ex'or v. Logwood, 20 Va. (6 Munf.) 491, 505-06 (1820). It is doubtful that one or the other of these grounds, singly and unaccompanied by other circumstances, would today entitle a person to equitable relief. Restatement of Judgments § 126 (1942). The increase in litigation and the advanced complexities of a modern day business world have necessitated rules more rigorous than those existing at an earlier time, requiring that there be a high degree of finality to judgments. But surely, even today, where there coincide in the same case the two grounds asserted here, i.e., a claim that knowledge of proceedings resulting in entry of a default judgment was withheld from a defendant served by substituted process and a claim that the judgment was based upon a forged document, a court of equity should be open to the injured party. Here, it is admitted at this stage of the proceedings that the note was forged and that Powell did not know of the service of process on him or of the entry of the default judgment against him. The allegations of his bill negate a claim of negligence on his part in suffering the default. It is obvious why he did not know what was going on. Service on him was secured by delivering his copy of the summons to a daughter who was herself signatory to the allegedly forged instrument and a party defendant to the very proceeding in which the default judgment was entered. That she would keep from him knowledge of what had occurred and what was about to occur is not surprising.

- 405 - But this meant that he was thereby prevented from making his defense and showing that the instrument sued upon was a forgery. Under these exceptional circumstances, he is entitled to equitable relief if he can prove his case and is not otherwise barred. Beneficial contends, however, that Powell is barred from equitable relief because he did not seek a new trial under Code § 16.1-97 within thirty days of the date of the judgment. Beneficial says that Powell alleged in his bill that the judgment was entered on February 17, 1971, and that the first "writ of garnishment" was issued in the same month. Therefore, Beneficial argues, Powell knew of the judgment within the thirty- day period fixed by Code § 16.1-97 and should have sought relief thereunder. We need not decide the legal merits of Beneficial's contention. Although Powell alleged that the first "writ of garnishment" was issued in February, 1971, he further alleged that he "even then . . . knew nothing of the fraudulent activities of the Defendant Katherine Elaine Powell Dowdy." He also alleged that it was not until he was "called" by his employer that he knew of the default judgment, and we do not know when that was. So we cannot say that Powell knew of the judgment within the thirty-day period following its entry. Finally, Beneficial contends that Powell should be denied equitable relief because he was guilty of laches in waiting until October, 1971, to file his bill of complaint when the judgment had been entered the preceding February, seven months earlier. We reject this contention out of hand. We hold that the trial court erred in sustaining Beneficial's demurrer and in dismissing Powell's bill of complaint. Accordingly, the final decree of the trial court will be reversed and the cause remanded for further proceedings.

- 406 -

H. Remedies for Undisclosed Judgments (Default or Otherwise)

Statutory Changes in General By specific legislative act the General Assembly has authorized trial courts to remedy lack of notice for the filing of an appeal through subsection C of Code § 8.01- 428. A trial court may enter an order under Code §8.01-428(C) extending a party's time to notice an appeal if that party received no notification, by any means, of the entry of a final order and the circuit court is satisfied that such lack of notice (i) did not result from a failure to exercise due diligence on the part of that party and (ii) denied that party an opportunity to file an appeal therefrom. In one widely-discussed case reviewed by the Supreme Court, an order was entered without notice to counsel for defendants and without notice to the defendants themselves, the lack of notice was not a result of the failure of defendants' counsel to exercise due diligence, and the lack of notice denied defendants an opportunity to file an appeal from the order. The Court noted that "[n]othing in the record indicates that defendants had notice of the March 24 order prior to May 2nd. Thus, defendant's time for noting an appeal under Rule 5:9 had expired under the March 24th order on April 23rd, absent relief under Code § 8.01-428(C)." The Court also found that the record supported the finding that the lack of notice of the order was not the result of a failure to exercise due diligence by the defendants. "Nothing in the record indicates that anyone could have determined from the court's file that the order had been entered until sometime the week of April 28th, if then. Indeed, nothing in the record indicates that any person could have determined from the court's file that the order had been entered prior to its receipt by the defendants on May 2nd. Neither the March 24 order nor any other entry in the record supports the supposition that the court's file contained the order prior to May 2nd." As the Court observed: "If the court's file does not contain the order, counsel cannot be deemed to have failed to exercise due diligence when discovery of that order was not available to the public." See Rose v. Jaques, 268 Va. 137, 597 S.E.2d 64 (2004). In 2005 the text of Code § 8.01-428(C) was modified to clarify that a party's opportunity for post-trial relief at the circuit court level is also implicated. Minor wording changes were also made to clarify the time for appeal provision. As edited, this subsection now states that if counsel, or a party not represented by counsel, who is not in default in a circuit court is not notified by any means of the entry of a final order and the circuit court is satisfied that such lack of notice (i) did not result from a failure to exercise due diligence on the part of that party and (ii) denied that party an opportunity to pursue post-trial relief in the circuit court or to file an appeal therefrom, the circuit court may, within 60 days of the entry of such order, modify, vacate, or suspend the order or grant the party leave to appeal. The section continues with a provision that if the circuit court does grant the party leave to appeal, "the computation of time for noting and perfecting an appeal shall run from the entry of such order, and such order shall have no other effect." This phrase is now found in Code § 8.01-428(C).

- 407 -

Soldiers' & Sailors' Relief Act

Note that 50 U.S.C. app. § 520 provides that before a default judgment may be taken against a member of the armed services the plaintiff must file an affidavit indicating defendant's military status, so that an attorney can be appointed to represent the defendant. A judgment entered without the filing of such an affidavit may be set aside and the case reopened if it appears that the defendant was prejudiced by reason of being in the service. In Flynn v. Great Atlantic Management Co., 246 Va. 93 (1993) the Supreme Court declined to protect a Navy man who failed to appear in General District Court even though he was in port on the return date for a landlord tenant proceeding, but went to sea during part of the period after judgment when steps could have been taken to seek reopening or appeal of the case. No prejudice cognizable under the federal act was found on those facts. A Virginia version of this Act was passed in 2005.

- 408 - Chapter 8 Pleadings and Motions

A. General Rules of Pleading ...... 411 Flexibility and Variance ...... 412 Damages… ...... 412 General Pleading Standards...... 413 Key Code Sections on Pleading...... 414 Code § 8.01-272 Pleading Several Matters; Joining Claims...... 414 Code § 8.01-281 Pleading in Alternative; Separate Trial...... 414 Rules of Court with Importance on Pleading...... 416 Rule 1:4 General Provisions as to Pleadings...... 416 Rule 1:5 Counsel...... 417 Rule 1:9 Discretion of Court...... 417 Rule 1:10 Verification...... 417 Rule 3:18 General Provisions as to Pleadings...... 418 Rule 7B:3 General Provisions as to Pleadings ...... 418 Case law Standards on Pleading...... 419 Moore v. Jefferson Hospital...... 419 Felvey v. Shaffer...... 421 Allegata, Probata, and the Rule Against Recovery on Claims Not Pled ...... 423 Hensley v. Dreyer ...... 423 Prayers for "General Relief" -- Benefits and Limits...... 427 Jenkins v. Bay House Associates ...... 427 Practical Pleading Notes...... 429 B. CHECKLIST: Form and Content of the Pleading...... 431 C. Damages and the Ad Damnum Clause...... 434 Powell v. Sears, Roebuck & Company ...... 434 Damages Notes ...... 436 Punitive Damages -- Nature of Conduct...... 438 D. Commencement of the Action ...... 440 Rule 3:2 Commencement of Civil Actions...... 440 Rule 3:4 Copies of Complaint ...... 440 Notice of Lis Pendens or Attachment...... 442 Code § 8.01-268 When and how docketed and indexed ...... 442 Code § 8.01-269 Dismissal or Satisfaction of Same ...... 442 E. The Basic Response Requirement...... 444 Rule 3:8 Answers, Pleas, Demurrers and Motions...... 444 Operation of the Answer Rule in Part Three of the Rules Today...... 445 F. Significant Motions and Demurrer ...... 447 Motions Challenging Subject Matter Jurisdiction...... 447 Code § 8.01-276 Demurrer to Evidence/ Plea in Abatement Abolished...... 447 Motions Challenging Personal Jurisdiction...... 448 Code § 8.01-277 Defective Process; Motion to Quash; Amendment ...... 448 Motions Challenging Venue ...... 448 Demurrer – The Standard and its Applications...... 449 Code §8.01-273(A) Demurrer ...... 450 Code §8.01-274 Motion to Strike Defensive Pleading...... 451 Perk v. Vector Resources Group...... 452 Craving Oyer...... 455 Ward's Equipment v. New Holland North America...... 455 NOTES on Demurrer Practice...... 458

- 409 - G. When a Complaint Has been Amended – What is Reviewed on Appeal? ...... 459 Breeding v. Hensley ...... 459 Bell Atlantic-Virginia, Inc. v. Arlington County ...... 460 Code § 8.01-384 Formal exceptions to rulings or orders of court unnecessary; motion for new trial unnecessary in certain cases...... 460 Code § 8.01-273(B) Demurrer and amendment and appeal ...... 461 H. Motion for a Bill of Particulars...... 462 Overview… ...... 462 Bill of Particulars Mechanics...... 462 Rule 3:7 Bills of Particulars ...... 463 Responding to an Amplified Pleading...... 466 I. Pleas in Bar or Special Pleas...... 467 Key Uses… ...... 467 Pleas in Bar – Taking Evidence? ...... 468 Pleas of the Statute of Limitations ...... 468 Code §8.01-235 Raising Statute of Limitations Defenses...... 468 NOTE on the Old Plea in Suspension...... 469 J. Use of Affidavits and Unsworn Declarations...... 469 K. Pleading to the Merits...... 470 L. Verification of Pleadings...... 470 Code § 8.01-279 When Proof is Unnecessary unless Affidavit Filed; Handwriting; Ownership; Partnership or Incorporation...... 470 Code § 8.3-307 Burden re signatures, defenses, and due course...... 471 Code § 8.01-28 Action upon contract or note...... 471 Code § 16.1-88 Procedure when plaintiff sues on sworn claim ...... 471 Sheets v. Ragsdale...... 473 NOTE on Extensions of Time to Plead and "Conditions" on Extensions...... 475 M. Amendment of Pleadings ...... 476 Core Principles and Important Situations ...... 476 Failure to Obtain Leave to Amend ...... 482 Mechtensimer v. Wilson...... 482 Rule 1:8 Amendments...... 482 Failure to Grant Leave to Amend ...... 483 Mortarino v. Consultant Engineering Services...... 483 NOTE: Changing the Named Defendant ...... 484 Code § 8.01-6 Amending Pleading to Correct Misnomer; Relation Back to Original Pleading...... 484 Code § 8.01-6.1 Amendment of pleading changing or adding a claim or defense; relation back...... 484 NOTES – "Relation Back" ...... 485 Hypothetical ...... 489 N. Notice of Submission of Draft Orders...... 490 Rule 1:12 Copies of Pleadings and Requests for Subpoenas ...... 490 Rule 1:13 Endorsements...... 490 Basic Operation of the Requirement...... 491 Rosillo v. Winters...... 491 Cofer v. Cofer ...... 493 Void or Voidable Orders Without Submission of Drafts ...... 494 Napert v. Napert ...... 494 Singh v. Mooney...... 496 Entry of Judgment By the Court Without Notice ...... 497 Smith v. Stanaway ...... 497 NOTE: a Remedy for"Undisclosed" Judgments?...... 499 Hypotheticals…… ...... 500

- 410 - As noted in the INTRODUCTION to these materials, the Rules are divided into Parts, which follow approximately the chronological progress which a case would normally follow. Thus, pleading and service are addressed in Parts Two (equity) and Three (law), pretrial procedures for discovery and the pretrial conference are covered in Part Four of the rules, and appeal is treated in Parts Five and Five A. Part One of the rules contains a variety of general provisions, some of which pertain to pleading. Guidance in the rules ranges from the highest plane of professional aspiration to the most mundanely practical directions on form and content. Thus, quite apart from the ethical strictures of the Code of Professional Responsibility in Virginia (the Bar of the Commonwealth has a Code somewhat similar to the ABA Model Code of Professional Responsibility, but with the format and sequence of disciplinary rules and ethical considerations reversed, and several substantive variations as well), the Rules of Court place the attorney in the position of making certifications in the course of filing papers and making motions, even oral motions. Under Rule 1:4(a) the signature by counsel on a pleading is necessary and is deemed to make a representation, as an officer of the court, that the pleading is made in "good faith and not for delay". This provision has recently been augmented by statute, adopting a broad version of the concepts found in Federal Rule 11. See generally Code § 8.01-271.1.

A. General Rules of Pleading

Actions at law are commenced by the preparation and filing of a complaint. See Rules 3:1 et seq. (rare statutory proceedings being an exception). Notice Pleading. The broad goal of notice pleading is espoused in Virginia. A pleading should, therefore, inform the adversary parties of what claims or defenses are raised, but it is not necessary to give extensive detail or to cite specific evidentiary matter. Rule 1:4(d); see also Rule 3:16. It is generally said that there will be no recovery unless the theory upon which a party prevails has been pled. See Ted Lansing Supply v. Royal Aluminum, 221 Va. 1139, 277 S.E.2d 228 (1981). Ameliorating that doctrine somewhat is the fact that pleading alternative facts and theories against alternative parties is permitted. R 1:4(k); see also §§ 8.01-272 and -281. Sufficiency and Particularity. It is sufficient at law and in equity for the pleader simply to state briefly the essential facts and legal claims. See Rules 1:4(d) and (j). When researching the substantive law for a prospective claim counsel will sometimes be alerted to necessary pleading elements (such as whether it is necessary to plead contact in an assault case, what the compensable elements are in various types of claims). As in federal practice, charges of fraud must be pleaded with "particularity" Tuscarora v. B.V.A. Credit Corp., 218 Va. 849, 241 S.E.2d 778 (1978).

- 411 - Flexibility and Variance Counsel drafting a complaining pleading face the inevitable tension between giving fair notice of the contours of the claim and hemming their client in. On one hand a pleading must give some clear notice of the claim. On the other hand, Virginia is not overly generous in dealing with "variance between allegata and probata", where the allegations say one thing and the proof adduced at trial shows something different. It was recently reiterated, for example, that judgment may not be entered for a party on a theory not pleaded. City of Norfolk v. Vaden, 237 Va. 40, 375 S.E.2d 730 (1989). Case law is replete with instances of minor variations, deemed inconsequential, and hence not posing difficulties. See, e.g., Simmers v. DePoy, 212 Va. 447, 184 S.E.2d 776 (1971)(allegation that the accident was south of intersection but at trial the proof indicated that it was north of intersection); Chappell v. Smith, 208 Va. 272, 156 S.E.2d 572 (1967)(an infant seeking medical expense recovery failed to allege emancipation but was allowed to prove it); Caputo v. Holt, 217 Va. 302, 228 S.E.2d 134 (1976)(the allegation of compensatory wrongful death damages was sufficient to encompass the proof offered about solace). Where there is a significant divergence between the allegations and the proof at trial, however, difficulties ensue. An example would be cases in which express contract is pled and the proof supports a quantum meruit recovery. See, e.g., Five Lakes, Inc. v. Randall, Inc., 214 Va. 4, 196 S.E.2d 906 (1973); Griffin v. Rainer, 212 Va. 627, 186 S.E.2d 10 (1972). Generally it is held that a party is limited to the case as alleged. See Travelers Indemnity Co. v. Obenshain, 219 Va. 44, 245 S.E.2d 247 (1978); Goodstein v. Weinberg, 219 Va. 105, 245 S.E. 140 (1978); Berry v. Klinger, 225 Va. 201, 300 S.E.2d 792 (1983). Unless amended, a litigant's pleadings are binding upon the party. The opponent is entitled to rely upon the position taken, and the implied assurance that this position will not suddenly be changed without notice during trial. For this reason, a litigant will not be permitted to assume, successively, an inconsistent and mutually contradictory position during trial. See Winslow v. Scaife, 224 Va. 647, 299 S.E.2d 354 (1983). [But see § 8.01-281 (pleading in the alternative permitted), -277 (amendment at trial may be permitted to conform the pleadings to the actual proof, if the adversary will not be prejudiced thereby), and Rule 1:8 (general amendment rule)].

Damages Drafting the claim should be informed by two doctrines firmly rooted in Virginia law. The first is that a plaintiff is bound by the upper limit of the ad damnum clause of the pleading. This means that even if the jury reports a verdict for an amount in excess of the stated recovery sought in the complaint it will not be recovered. See, e.g., Powell v. Sears, Roebuck, 231 Va. 464, 344 S.E.2d 916 (1986), reprinted in subsection B of this Chapter. Second, plaintiff cannot recover punitive damages if they are not pled in an express claim of the prayer for relief or ad damnum clause. See, e.g., Harrell v. Woodson, 233 Va. 117, 353 S.E.2d 770 (1987).)

- 412 - General Pleading Standards Joinder of Claims. As is more fully explored in Chapter 4, PARTIES AND CLAIMS, the common law rule that all plaintiffs in an action at law must advance a joint claim is preserved in Virginia (an exception being permitted claims of a parent joined with those of an injured child). Several plaintiffs sharing a cause of action may band together, but plaintiffs with disparate claims against the same defendant must sue separately at law. In equity, however, plaintiffs with different rights of action may jointly sue the defendant, at least if the claims arise out of the same transaction. A plaintiff may, however, plead alternative theories against multiple defendants (such as when it is unclear which defendant was driving the second car involved in an accident). Recall Fox v. Deese, in Chapter 4, which confirms a significant expansion of liberality in joinder. Pleading under Oath. It is not generally necessary for the aggressive or defensive pleadings in Virginia to be made under oath. Where a statute does require a pleading to be made under oath, and the pleader files an unverified paper, the requirement is waived unless the opponent moves within seven days to strike the pleading (at which point the court will give the pleader an opportunity to satisfy the requirement before actually striking the pleading). The defense of forgery must be plead under oath, as must denials concerning ownership or control of a vehicle or other instrumentality, and denials of incorporation or partnership status. Similarly, if the plaintiff in a creditor's rights action has attached an affidavit that the sum sought is due and owing, denial of the averment must be under oath. Attorney Preparation. Unless an individual is appearing pro se, there is a requirement in Virginia that an attorney prepare the pleadings. It has also been held that the attorney must be in "good standing" with the Virginia State Bar at the time of this work. In one case the attorney's suspension was discovered mid-stream and the plaintiffs attempted to take a nonsuit. The Supreme Court held that the trial court erred in granting the nonsuit in a proceeding in which a complaint was signed by an attorney whose license to practice law in the Commonwealth had been administratively suspended. Under the statutes and rules regulating the and licensing of lawyers, the attorney was not authorized to practice law during this period. Thus, any pleadings filed by him or her are invalid and have no legal effect. Therefore, no valid proceeding was pending which could be nonsuited. See generally Nerri v. Adu-Gyamfi, 270 Va. 28, 613 S.E.2d 429 (2005). Use of Affidavits and Unsworn Declarations. While there is no rule at the time of this writing expressly permitting use of affidavits on summary judgment, there are a variety of situations in modern Virginia litigation when affidavits are helpful and necessary. In 2005 the General Assembly adopted a provision modeled on the federal statute that has been effect for decades, allowing a party to make an unsworn "declaration" which is expressly subject to the penalties of perjury, which will have the same effect and be usable in the same circumstances as an affidavit in Virginia practice. The new Code provision, § 8.01-4.3 is entitled: "Unsworn declarations under penalty of perjury; penalty." It states that any matter in any judicial proceeding or administrative hearing which is "required or permitted to be established by a sworn written declaration, verification, certificate, statement, oath, or affidavit," may, "with like force and effect, be evidenced, by the unsworn written declaration, certificate,

- 413 - verification, or statement, which is subscribed by the maker as true under penalty of perjury." The declaration must be dated, in cast in "substantially the following form": "I declare (or certify, verify or state) under penalty of perjury that the foregoing is true and correct." The Code provision expressly states that the declaration mechanism is not applicable to a deposition, an oath of office, or an oath required to be taken before a specified official other than a notary public. See generally Code §8.01-4.3.

Key Code Sections on Pleading

§ 8.01-272 Pleading Several Matters; Joining Tort and Contract Claims; Separate Trial in Discretion of Court; Counterclaims. In any civil action, a party may plead as many matters, whether of law or fact, as he shall think necessary. A party may join a claim in tort with one in contract provided that all claims so joined arise out of the same transaction or occurrence. The court, in its discretion, may order a separate trial for any claim. Any counterclaim brought in an action under Part Three of the Rules of Court shall be governed by such Rules.

§ 8.01-281 Pleading in Alternative; Separate Trial on Motion of Party. A. A party asserting either a claim, counterclaim, cross-claim, or third- party claim or a defense may plead alternative facts and theories of recovery against alternative parties, provided that such claims, defenses, or demands for relief so joined arise out of the same transaction or occurrence. Such claim, counterclaim, cross-claim, or third-party claim may be for contribution, indemnity, subrogation, or contract, express or implied; it may be based on future potential liability, and it shall be no defense thereto that the party asserting such claim, counterclaim, cross-claim, or third-party claim has made no payment or otherwise discharged any claim as to him arising out of the transaction or occurrence. B. The court may, upon motion of any party, order a separate trial of any claim, counterclaim, cross-claim, or third-party claim, and of any separate issue or of any number of such claims; however, in any action wherein a defendant files a third-party motion for judgment alleging that damages to the person or property of the plaintiff were caused by the negligence of the third- party defendant in the operation of a motor vehicle, the court shall, upon motion of the plaintiff made at least five days in advance of trial, order a separate trial of such third-party claim.

- 414 - - 415 - Rules of Court with Importance on Pleading

Rule 1:4 General Provisions as to Pleadings. (a) Counsel tendering a pleading gives his assurance as an officer of the court that it is filed in good faith and not for delay. (b) A pleading that is sworn to is an affidavit for all purposes for which an affidavit is required or permitted. (c) Counsel or an unrepresented party who files a pleading shall sign it and state his address. (d) Every pleading shall state the facts on which the party relies in numbered paragraphs, and it shall be sufficient if it clearly informs the opposite party of the true nature of the claim or defense. (e) An allegation of fact in a pleading that is not denied by the adverse party's pleading, when the adverse party is required by these Rules to file such pleading, is deemed to be admitted. An allegation in a pleading that the party does not know whether a fact exists shall be treated as a denial that the fact exists. (f) Requirements of pleadings applicable to instruments not under seal shall apply to instruments under seal. (g) Requirements of pleadings applicable to legal defenses shall apply to equitable defenses. (h) The clerk shall note and attest the filing date on every pleading. (i) The mention in a pleading of an accompanying exhibit shall, of itself and without more, make such exhibit a part of the pleading. (j) Brevity is enjoined as the outstanding characteristic of good pleading. In any pleading a simple statement, in numbered paragraphs, of the essential facts is sufficient. (k) A party asserting either a claim, counterclaim, cross-claim, or third- party claim or a defense may plead alternative facts and theories of recovery against alternative parties, provided that such claims, defenses, or demands for relief so joined arise out of the same transaction or occurrence. When two or more statements are made in the alternative and one of them if made independently would be sufficient, the pleading is not made insufficient by the insufficiency of one or more of the alternative statements. A party may also state as many separate claims or defenses as he has regardless of consistency and whether based on legal or equitable grounds.

- 416 - Rule 1:5. Counsel. When used in these Rules, the word "counsel" includes a partnership, a professional corporation or an association of members of the Virginia State Bar practicing under a firm name. When such firm name is signed to a pleading, notice or brief, the name of at least one individual member or associate of such firm must be signed to it. Signatures to briefs and petitions for rehearing may be printed or typed and need not be in handwriting. Service on one member or associate of such firm shall constitute service on the firm. Service is not required to be made on foreign attorneys. "Counsel of record" includes a counsel or party who has signed a pleading in the case or who has notified the other parties and the clerk in writing that he appears in the case. Counsel of record shall not withdraw from a case except by leave of court after notice to the client of the time and place of a motion for leave to withdraw.

Rule 1:9. Discretion of Court. All steps and procedures in the clerk's office touching the filing of pleadings and the maturing of suits or actions may be reviewed and corrected by the court. The time allowed for filing pleadings may be extended by the court in its discretion and such extension may be granted although the time fixed already has expired; but the time fixed for the filing of a motion challenging the venue shall in no case be extended except to the extent permitted by § 8.01-264.

Rule 1:10. Verification. If a statute requires a pleading to be sworn to, and it is not, or requires a pleading to be accompanied by an affidavit, and it is not, but contains all the allegations required, objection on either ground must be made within seven days after the pleading is filed by a motion to strike; otherwise the objection is waived. At any time before the court passes on the motion or within such time thereafter as the court may prescribe, the pleading may be sworn to or the affidavit filed.

- 417 - Rule 3:18. General Provisions as to Pleadings. (a) Pleadings. — All motions in writing, including a motion for a bill of particulars and a motion to dismiss, are pleadings. (b) Allegation of negligence. — An allegation of negligence or contributory negligence is sufficient without specifying the particulars of the negligence. (c) Contributory negligence as a defense. Contributory negligence shall not constitute a defense unless pleaded or shown by the plaintiff's evidence. (d) Pleading the statute of limitations. An allegation that an action is barred by the statute of limitations is sufficient without specifying the particular statute relied on. (e) Separate or combined papers. Answers, counterclaims, cross-claims, pleas, demurrers, affirmative defenses and motions may all be included in the same paper if they are separately identified.

[General District Court]

Rule 7B:3. General Provisions as to Pleadings. (a) A party asserting either a claim, counterclaim, cross-claim or a defense may plead alternative facts and theories of recovery against alternative parties, provided that such claims, defenses, or demands for relief so joined arise out of the same transaction or occurrence. Subject to the jurisdictional limits of the General District Court, a party may also state separate related claims or defenses regardless of consistency and whether based on legal or equitable grounds. (b) The warrant, summons or motion for judgment or an attachment thereto shall contain a statement, approved by the Committee on District Courts, explaining how a defendant may object to venue. (c) The warrant, summons or motion for judgment, or an attachment thereto shall contain a statement, approved by the Committee on District Courts, explaining that if the case is contested, how a trial date will be set. (d) All civil warrants and motions for judgment shall contain on their face language in substantially the following form: "The defendant is not required to appear pursuant to this document, but if the defendant does not appear, judgment may be granted in favor of the plaintiff."

- 418 - Caselaw Standards on Pleading

MOORE v. JEFFERSON HOSPITAL 208 Va. 438, 158 S.E.2d 124 (1967)

JUSTICE BUCHANAN delivered the opinion of the court. The issue in this case is whether the plaintiff's motion for judgment [now called a “complaint”] stated a cause of action. James Howery Moore, the plaintiff, filed a motion for judgment against Jefferson Hospital, Inc., and Phyllis K. Hatter, its employee, seeking to recover compensatory and punitive damages for "injuries and illnesses" alleged to have been suffered by him when he was a patient in the hospital. The motion for judgment alleged as follows: That on March 21, 1963, plaintiff was a patient in the hospital, under the care of Dr. John D. Varner, for the purpose of having surgery performed on his back, and on that day he underwent the necessary preparatory procedures and received medication to enable him to undergo the surgery; that he was taken to the operating room, placed on the operating table and strapped down for a considerable length of time; That when Dr. Varner arrived to perform the operation defendant Hatter, then a hospital employee and apparently in charge of the operating room, "maliciously, willfully and in a fit of unprovoked anger refused to permit Dr. Varner to proceed with the surgery, and did by her actions wrongfully exclude Dr. Varner and the plaintiff from the use of the said operating room." That "the shock, humiliation and concern" which resulted to the plaintiff from the "wrongful and willful conduct" on the part of defendant Hatter caused him to become ill and to suffer pains and discomforts, "both mental and physical, together with an aggravation and worsening of the condition for which he was hospitalized and surgery had been scheduled;" and that this conduct constituted an assault on plaintiff which proximately caused his succeeding injuries and illnesses; that as a direct and proximate result of these occurrences, plaintiff was forced to expend considerable sums of money in the treatment of his illnesses, lost earnings from his occupation, and suffered in mind and body, for which he seeks judgment against defendants for

- 419 - $25,000 compensatory damages and $5,000 punitive damages. Both defendants filed demurrers on the ground that the "motion for judgment fails to state a cause of action" . . . What is now Rule 1:4(d)] provides in part: "Every pleading shall state the facts on which the party relies in numbered paragraphs, and it shall be sufficient if it clearly informs the opposite party of the true nature of the claim or defense. * * *" [The Rules also provide] for a bill of particulars when the pleading does not comply with the rule, and for an amended bill; and if the latter fails to inform fairly as to the true nature of the claim, the faulty pleading and the bills of particulars may be stricken. A motion for judgment "must set forth the essential facts (not conclusions of law) which constitute the foundation in law, of the judgment to be asked, and * * * this must be done with sufficient definiteness to enable the court to find the existence of a legal basis for its judgment. In other words, despite the liberality of presentation which the court will indulge, the motion must state a cause of action." Burks Pleading and Practice, 4 ed., § 182, p. 295. For the purpose of testing the sufficiency of the motion for judgment against defendants' demurrers, the facts alleged are admitted as true. Manassas Park Development Co. v. Offutt, 203 Va. 382, 384, 124 S.E.2d 29, 30. The essential facts alleged in plaintiff's motion for judgment were that he was a patient in the hospital in order to have surgery; that he had been prepared for surgery, including administration of medications, and had been taken to the operating room and strapped on the operating table for a considerable length of time. When the physician who was to perform the operation, Dr. Varner, arrived, defendant Phyllis Hatter, in charge of the operating room "maliciously, willfully and in a fit of unprovoked anger" refused to permit Dr. Varner to proceed and excluded the physician and plaintiff from the operating room. From this occurrence plaintiff suffered various physical and mental pains and discomforts and a worsening of the condition for which surgery had been scheduled, causing him to expend sums for his cure, to lose time from work and to suffer in mind and body. The motion for judgment alleges that Phyllis Hatter's conduct was willful and malicious and the amended bill of particulars characterized it as "willful, wanton, malicious, vindictive and grossly negligent behavior toward the plaintiff, which proximately caused injury to the plaintiff, both mental and physical". We hold that the motion for judgment sufficiently alleged a willful (intentional) tort on the part of defendant Phyllis Hatter, without actual physical contact with plaintiff, causing him physical and mental injuries and illnesses. . . . The question of whether, if the plaintiff proves his case stated against defendant Hatter, there is liability on the defendant hospital, will be determined from the evidence.

- 420 -

FELVEY v. SHAFFER 186 Va. 419, 42 S.E.2d 860 (1947)

JUSTICE EGGLESTON delivered the opinion of the court. M. Louis Shaffer, to whom we shall refer as the plaintiff, filed in the court below . . . a notice of motion for judgment against Charles A. Felvey, Jr., hereinafter called the defendant. Since the form of the notice is brought into question, we set out in full the material portion thereof: "You are hereby notified that on the 8th day of March, 1946, at 10:00 o'clock A.M., or as soon thereafter as it may be heard, the undersigned will move the Hustings Court of the City of Richmond, Virginia, Part II, for a judgment against you for the sum of Ten Thousand Dollars ($10,000.00), which sum is due and owing from you to the undersigned for this, to wit: "That heretofore, to wit, on the 6th day of October, 1945, at and in the City of Richmond, Virginia, in a certain discourse which you then and there had in the presence and hearing of other good and worthy citizens of this Commonwealth, you maliciously intending to insult the undersigned, and to injure the undersigned in good name, fame and credit, and to bring the undersigned into public infamy, scandal and disgrace, you at the time and place aforesaid, maliciously, falsely and insultingly spoke of, concerning and to the undersigned the false, scandalous, malicious, defamatory and insulting words following, which are, from their usual construction and common acceptation, construed as insults, and tend to violence and breach of the peace, and which were construed as insults by those who heard them, to wit: '* * * you (meaning the undersigned) God damn son of a bitch; you thief; you crook; you bastard * * *.' "That at the same time and place and after making the above statements to me you violently and maliciously made an assault upon me and kicked and seriously and permanently injured me. "Wherefore, judgment for said sum, together with costs, will be asked at the time and place hereinabove set out."

- 421 - . . . The defendant's main contention is that the notice of motion for judgment is fatally defective for duplicity, in that it sets forth in a single count an action for "insulting words" and an action for "assault and battery." Because of this alleged defect the defendant, at the commencement of the trial, moved the court to require the plaintiff to elect on which action he would proceed. This motion was overruled. On the same ground the defendant moved to strike the evidence of the assault. He likewise moved the court to instruct the jury that such evidence was admissible only as proof that the alleged slanderous words were spoken with malice. These motions were likewise overruled. In our opinion, the lower court's disposition of these motions was proper. In the first place, it is by no means clear that the two causes of action are combined in a single count. Each is fully stated in a separate paragraph in which the time, place and circumstances are set forth. While the paragraphs are not numbered and designated as "Count One" and "Count Two," this is not necessary. . . In Hines v. Beard, 130 Va. 286, 291, 107 S.E. 717, this court, speaking through Judge Burks, the eminent author and instructor in the field of pleading and practice, said: "In a proceeding by motion * * * it is not necessary, though it may be very desirable, to have separate counts in the notice. The case may be stated in a composite form, * * *." This is in accord with our holding that a proceeding by way of a notice of motion for judgment. . . was "intended to dispense with matters of mere form, but not of substance" (Bardach Iron & Steel Co. v. Tenenbaum, 136 Va. 163, 169, 118 S.E. 502); that it was designed to afford the plaintiff "a simpler and cheaper remedy, shorn of the common-law technicalities," and to that end the statute "should be construed with great liberality". . . In the case before us the two causes of action, the one for insulting words and the other for assault and battery, both sound in tort, are closely related and arise out of the same incident. They should have been the basis of a single suit. While, as was said in Hines v. Beard, supra, it would have been in better form to have stated the two causes of action in separate counts, this was not necessary.

- 422 - Allegata, Probata, and the Rule Against Recovery on Claims Not Pled

HENSLEY v. DREYER 247 Va. 25; 439 S.E.2d 372 (1994)

JUSTICE COMPTON delivered the opinion of the Court: Pertinent to this controversy, Code § 8.01-377 provides that when, at trial, there appears to be a variance between the evidence and the allegations, the court "if it consider that substantial justice will be promoted and that the opposite party cannot be prejudiced thereby," may, instead of allowing the pleadings to be amended, direct that the facts be determined. The statute further provides that after such factual finding, the court "shall give judgment according to the right of the case," if it considers that the variance "could not have prejudiced the opposite party." In this appeal, the broad question presented is whether the trial court, after finding a variance between the evidence and the allegations, erred in ordering rescission of a deed on the basis of mutual mistake of fact when the plaintiffs sought rescission on the theory of fraud. [The sellers of a lot provided a letter to the purchasers that misrepresented that a workable septic drainfield was located on the premises. Ed.] In April 1990, the court below entered a pretrial order framing the main issue as: Were the purchasers "defrauded (whether by actual or constructive fraud) by the representation(s)" of the sellers "such that they are entitled to equitable relief in rescission of the subject Deed to real property?" In November 1990, the trial court held an ore tenus hearing. The purchasers presented evidence that the sellers had "deliberately" misled them "as to the existence of and the location of the drainfield." However, Mr. Dreyer, one of the purchasers, testified that the sellers "may have innocently misled" them into believing "that a functioning drainfield existed upon the subject property." The record shows that the sellers moved to strike the purchasers' evidence both at the conclusion of the purchasers' case-in-chief and at the conclusion of all the evidence upon the ground that the purchasers "had failed to prove actual fraud on the part of" the sellers. The record also shows that neither the trial court nor counsel gave any indication at trial that a variance existed between the evidence and the pleadings. . . The chancellor took the matter under advisement and, in September 1991, ruled in favor of the purchasers in a letter opinion. The court found "this controversy to be the result of plain mistake and not the effect of fraud or contrivance." The court specifically found there was "no constructive fraud." After noting that the "real villain is the Health Department" that is "no longer a party," the chancellor wrote, "It devolves upon the Court to fashion such remedy as equity can at this stage of the proceedings." Referring to post-trial discussions, the chancellor stated it was "conceded by counsel that the Court had the power to grant leave to the complainants to amend to plead mutual mistake." The chancellor went on to state there was no objection to

- 423 - evidence introduced at trial "because of any variance as contemplated by Code Section 8.01-377, and the Court deems the failure to object to constitute waiver."99 Observing that "under the facts of this case substantially the same evidence would have been admissible, irrespective of which theory of recovery had been pleaded," the chancellor stated "that the variance here was not such as could have prejudiced the [sellers], and the Court will treat this suit as one for rescission based on mutual mistake of fact." Accordingly, the court ordered reconveyance of the lot to the sellers and referred the cause to a commissioner in chancery to inquire and report to the court upon the difference in value resulting to the lot as a consequence of the work done by the purchasers. . . On appeal, the crucial inquiry is whether the trial court correctly ruled, in the language of Code § 8.01-377, that the sellers "could not have been prejudiced" by the court's action in ordering rescission for mutual mistake of fact once it determined that a variance existed between the evidence and the purchasers' allegations of fraud. Contending that the trial court did not err, the purchasers argue the parties believed they were selling and buying respectively a lot that would allow construction of a three- bedroom home with appropriate toilet facilities. Conceding that "it may be true that mistake of fact was not literally pled," the purchasers argue that the "underlying transaction, the agreement and the equitable relief sought to be proven are all the same. The variance simply alters the mode of seeking rescission." Also, the purchasers argue there is some "overlap" among the requirements to prove constructive fraud versus mutual mistake of fact to support rescission (i.e., the fact misrepresented or the term mistaken must be material, must be acted upon, and must result in damage). Thus, they say, the case they proved was not "wholly different from the one alleged." They maintain the sellers "are not now prejudiced" by the trial court's recognition that the sellers and purchasers "were operating and bargaining under a mutual mistake of fact which, like fraud, gives rise in equity to rescission." We disagree. We adhere to the principle that a court may not base a judgment or decree upon facts not alleged or upon a right, however meritorious, that has not been pleaded and claimed. Every litigant is entitled to be told in plain and explicit language the adversary's ground of complaint. Ted Lansing Supply Co. v. Royal Aluminum and Constr. Corp., 221 Va. 1139, 1141, 277 S.E.2d 228, 230 (1981). Like any other rule, however, this principle must be reasonably applied, keeping in mind that its purpose is to prevent surprise. Kennedy v. Mullins, 155 Va. 166, 180, 154 S.E. 568, 572 (1930). In a case of variance, Code § 8.01-377 gives a trial court the discretion to apply the foregoing rule reasonably either by permitting amendment of the pleadings (and

99 Editor’s Note: The cited code section provides as follows: § 8.01-377. Remedy when variance appears between evidence and allegations If, at the trial of any action, there appears to be a variance between the evidence and the allegations or recitals, the court, if it consider that substantial justice will be promoted and that the opposite party cannot be prejudiced thereby, may allow the pleadings to be amended, on such terms as to the payment of costs or postponement of the trial, or both, as it may deem reasonable. Or, instead of the pleadings being amended, the court may direct the jury to find the facts, and, after such finding, if it consider the variance such as could not have prejudiced the opposite party, shall give judgment according to the right of the case.

- 424 - possibly postponing the trial) or, in lieu of amendment, by having the facts determined and rendering judgment, but only on the condition that no prejudice results. While the statute is remedial in purpose and should be liberally construed, Provident Life and Accident Ins. Co. v. Walker, 190 Va. 1016, 1025, 59 S.E.2d 126, 130 (1950), it should not be interpreted in a manner inconsistent with its plain language. City of Richmond v. Richmond Metro. Auth., 210 Va. 645, 648, 172 S.E.2d 831, 833 (1970). We hold the trial court abused its discretion by concluding, in a manner inconsistent with the statutory language, that the variance "could not have prejudiced" the sellers. The court's decision based on mistake of fact when fraud had been alleged, and when the entire matter had proceeded on that theory, prevented the sellers from offering evidence in support of at least one settled maxim of equity jurisprudence. That maxim denies relief based upon a mutual mistake of fact when a written instrument is involved and the equities are equal. When "each party is equally innocent, and there is no concealment of facts which the other party has a right to know, and no surprise or imposition exists, the mistake or ignorance, whether mutual or unilateral, is treated as laying no foundation for equitable interference. It is strictly damnum absque injuria." 1 Joseph Story, Commentaries on Equity Jurisprudence §223 (14th ed. 1918). This may be such a case, given the evidence. Yet the sellers, resisting rescission, were denied the opportunity to develop this issue. This could have prejudiced the sellers within the meaning of Code § 8.01- 377. The purchasers point out that the appellate record does not contain a transcript of the trial, only a Rule 5:11(c) written statement of facts. Thus, they argue, there is no basis to conclude that no evidence was submitted to the trial court on mutual mistake of fact, and the decision below must be presumed correct and binding on appeal. But even though we do not have the benefit of a transcript of the trial testimony, we do know from the agreed statement of facts, as well as from a detailed recitation of facts in the chancellor's letter opinion, that the foregoing equitable maxim was the subject of neither evidence nor argument; the record is completely silent on the issue and we must conclude that the sellers never had the opportunity to develop that aspect of the mistake issue. Finally, we reject the purchasers' contention that the trial court correctly ruled that the sellers waived their right to object to the variance based on mistake. There can be no waiver when, as here, mistake has not been alleged and the evidence offered was relevant to the fraud theory on which the case was tried. Accordingly, the decree based on mistake will be reversed. The trial court, upon finding that fraud had not been proved, erred in denying the sellers' motions to strike. Thus, we will enter final judgment here in favor of the sellers dismissing the bill of complaint because the purchasers failed to prove fraud.

- 425 - - 426 - Prayers for "General Relief" – Benefits and Limits

JENKINS v. BAY HOUSE ASSOCIATES 266 Va. 39, 581 S.E.2d 510 (2003)

JUSTICE KEENAN delivered the opinion of the Court: . . . . The pleadings in the present case did not contain any assertions that the defendants committed a trespass on waters owned by Bay House. Instead, Bay House's bill of complaint alleged only that Bay House owned the land beneath the pond, and that the defendants [neighboring landowners] had committed acts of trespass by affixing their piers to Bay House's submerged land. In accordance with these facts alleged, Bay House requested that the defendants be enjoined from such trespasses on "the land of Bay House." Based on these allegations, the case pleaded by Bay House was limited strictly to its ownership of the land and to the defendants' encroachment on that land. The total absence from these pleadings of any claim that Bay House owned the pond's waters and that the defendants were committing a continuing trespass thereon precluded the chancellor from determining ownership of the waters and from imposing a remedy based on such facts not alleged. See Sink, 247 Va. at 425, 442 S.E.2d at 647; Hensley, 247 Va. at 30, 439 S.E.2d at 375; Harrell, 233 Va. at 121, 353 S.E.2d at 773. The chancellor's contrary decision permitted Bay House to obtain relief without providing the defendants notice in the bill of complaint of any claim regarding their use of the pond's waters. This absence of notice in the pleadings was especially detrimental to the defendants because their right to use the pond's waters rested on the issue whether the waters were navigable, and the defendants bore the burden of proof on that issue. See Boerner v. McCallister, 197 Va. 169, 175, 89 S.E.2d 23, 27 (1955). Thus, the defendants were placed in the untenable position of bearing the burden of proof on an issue that Bay House did not identify in its pleadings. We also find no merit in Bay House's assertion that its general prayer for relief permitted the chancellor to issue an injunction regarding the defendants' use of the pond's waters. When a party prays for both special and general relief and no relief may be granted under the special prayer, a court of equity may grant proper relief under the general prayer that is consistent with the case stated in the bill of complaint. Johnson v. Buzzard Island Shooting Club, Inc., 232 Va. 32, 36, 348 S.E.2d 220, 222 (1986); Winston v. Winston, 144 Va. 848, 858, 130 S.E. 784- 59, 144 Va. 848, 130 S.E. 784, 787 (1925); see Sink, 247 Va. at 425, 442 S.E.2d at 648; Wright v. Castles, 232 Va. 218, 222, 349 S.E.2d 125, 128 945 (1986). However, a general prayer will support relief only for those matters placed in controversy by the pleadings and, thus, any relief granted must be supported by allegations of material facts in the pleadings that will sustain such relief. See Johnson, 232 Va. at 36, 348 S.E.2d at 222; Parks v. Wiltbank, 177 Va. 461, 465-66, 14 S.E.2d 281, 282 (1941); Dobie v. Sears, Roebuck & Co., 164 Va. 464, 475, 180 S.E. 289, 293 (1935). This rule reflects the principle that although the power of an equity court is broad, that power does not permit a court to adjudicate claims that the parties have not asserted. See Sink, 247 Va. at 425, 442 S.E.2d at 647.

- 427 - Here, the failure of Bay House's pleadings to put ownership of the pond's waters at issue, or to allege a trespass to those waters by the defendants, placed these issues beyond the reach of Bay House's general prayer for relief. Therefore, the absence of such charges and facts from the bill of complaint excluded those issues from the scope of the relief that the chancellor was permitted to consider. Accordingly, we hold that under the particular pleadings in this case, the chancellor erred in awarding Bay House any relief regarding the pond's waters and the defendants' use of those waters.

______

- 428 - Practical Pleading Notes

Vague Aggressive Pleadings. A party may respond to a vague complaint with a motion for a bill of particulars. See section D-5, below. Vague Responsive Pleadings. A defendant may (apart from admitting specific items) deny averments in an aggressive pleading or state that there is insufficient information at defendant's disposal to permit a response. The latter position has the effect of a denial. However, a response which is ambiguous or vague may later be given the effect of an admission. Exhibits to Pleadings. As in other jurisdictions, exhibits may be incorporated in pleadings by reference. See Rule 1:4(i). Unlike most jurisdictions, Virginia does not require that a copy of the referenced exhibits be served on the adversary. Objections to Certain Failures. Objections to any failure to swear to pleading, or to produce a required affidavit (e.g. § 8.01-28 and -279) must be made within 7 days. See Rule 1:10, set forth above. See Sheets v. Ragsdale, 220 Va. 322, 257 S.E.2d 858 (1979). Signing Affidavits for Corporate Clients. Counsel can also now sign affidavits for corporate clients. § 49-7; see, e.g., §§ 8.01-313 (service on statutory agent); § 8.01- 316 (service by publication). Service by mail: time for response to papers served on a party by mail is the period provided by rule or statute, plus 3 days. Rule 1:7. "Service" thus occurs on the day the paper is mailed, and the response period is calculated from that point. Generally, the day of the triggering event, such as service, is not counted in calculating the response date. Extensions of time. The Code provides for the extension of time in light of official holidays. See Code § 1-13.3:1, below. The court, moreover, has discretion to extend time for filing all pleadings. See Rule 1:9. However, extension of the 21-day period for objection to venue will be available only if the time for filing responsive pleadings is extended. § 8.01-264(A). The relevant code sections are: Writs of Mandamus. The extraordinary writ of Mandamus is available under § 8.01-644 et seq. of the Code, in limited circumstances. Averments must demonstrate that the petitioner for the writ has a clear right to the relief sought, which normally pertains to defendant's non-performance of a ministerial (as opposed to discretionary) act, which the defendant is legally obligated to perform. Petitioner must show that there is no adequate remedy at law in lieu of the Mandamus writ sought. See Richlands Medical Association v. Commonwealth of Virginia, 230 Va. 384, 337 S.E.2d 737 (1985). Mandamus is not a vehicle for appealing actions of a court or agency within their jurisdiction, even if erroneous rulings are being made. Unpled theories. The Supreme Court has repeatedly held that a trial court cannot enter a judgment on a theory not pled. “A right not pled” will not sustain even an equity decree, where the powers are generally thought to be broad. See, e.g., Smith v. Sink, 247 Va. 423, 442 S.E.2d 646 (1994) (the court there also stresses that “general relief” in equity must be consistent with the specific claims in the complaint to warrant relief). Examples: pleading rights to the bed of a pond did not permit the chancellor in

- 429 - equity to award a decision concerning ownership of the waters in the pond. Jenkins v. Bay House Associates, 266 Va. 39, 581 S.E.2d 510 (2003)(set forth in the preceding section); Board of Supervisors v. Robertson, 266 Va. 525 (2003) (error of trial court in zoning dispute to adopt construction of ordinances not advanced by either party). Notice Pleading Continues Under the New Rules. As has been evident in recent decades, the broad goal of the modern approach to pleading in Virginia is to assure proper notice to the adversary of the claims or defenses being contested, and to begin the process of defining the issues. See generally City of Norfolk v. Vaden, 237 Va. 40, 44, 375 S.E.2d 730, 731-32 (1989). The broad goal of notice pleading has long been espoused in Virginia and is continued in the 2006 revisions of the Rules of Court. A pleading should, therefore, inform the adversary parties of what claims or defenses are raised, but it is not necessary to give extensive detail or to cite specific evidentiary matter. Sufficiency and Particularity. Even before the 2006 reforms, it has been generally sufficient in Virginia pleadings, setting forth either legal or equitable claims, for the pleader simply to state briefly the essential facts and legal claims. When researching the substantive law for a prospective claim counsel will sometimes be alerted to necessary pleading elements (such as whether it is necessary to plead contact in an assault case, what the compensable elements are in various types of claims). As in federal practice, charges of fraud must be pleaded with "particularity." Tuscarora v. B.V.A. Credit Corp., 218 Va. 849, 241 S.E.2d 778 (1978). Technical forms are not required. Nor is Virginia a "fact pleading" state in which evidentiary detail should be included in the complaint. Instead, the pleading should inform the adversary parties of what claims or defenses are raised, but it is not necessary to give extensive detail or to cite specific evidentiary matter. Rule 1:4(d). Where equitable relief, such as an injunction, is sought, the pleading should not only inform the defendant of the nature of the claim, but in addition should indicate the basis for the equity relief sought, such as irreparable harm. The complaint must state a cause of action or it will be stricken upon demurrer. In another oddity of Virginia practice, a large number of causes of action are codified in Title 8.01 of the Code of Virginia. Others are defined by common law evolution. The complaint must include each of the requisite elements of the cause of action to avoid dismissal of the case, or even sanctions: failure to plead necessary elements can lead to the sustaining of a demurrer, or sanctions. Perk v. Vector Resources Group, 253 Va. 310, 485 S.E.2d 140 (1997). Anticipation of defenses in equity. Unlike the practice in most jurisdictions, by tradition in Virginia a plaintiff's complaint was expected to anticipate the defenses to be raised and to set forth any matter on which plaintiff will rely in response thereto. There is nothing in the 2006 Rules of court creating a single form of civil action that addresses this requirement. It may no longer exist. Prior to 2006, if it was expected that the defendant will assert specific affirmative defenses it would be proper to anticipate those defenses and set forth in the complaint any grounds for avoiding them. Formerly, when there was a defense actually raised which is not provided for in the bill of complaint, the plaintiff's remedy is to amend the complaint (with leave of court) to set forth responsive matter (a reply pleading or "replication" was not available to perform this function). Under the 2006 Rules, however, it appears that a reply pleading is permitted under Rule 3:11 in any civil case, which means that the anticipation of defenses should no longer be a requirement in any civil case, whether or not the cause of action is one that was traditionally an equitable matter.

- 430 -

B. CHECKLIST: Form and Content of the Pleading

The following is adapted from Kent Sinclair, GUIDE TO VIRGINIA LAW & EQUITY REFORM AND OTHER LANDMARK CHANGES (2006). Under the new Rules of Court and existing statutory provisions, the complaint must: ; Include a caption stating the name of the court107 ; State the "full style of the case," which includes names of all of the parties108 ; Furnish the last known address of each defendant, and if plaintiff is unable to furnish such name and address, the plaintiff must furnish "such salient facts as are calculated to identify with reasonable certainty such defendant."109 Note that new Rule 3:2 states that the requirements of Code § 8.01-290 "may be met by giving the address or other data after the name of each defendant."110 ; State the facts on which the plaintiff relies in numbered paragraphs111 ; Provide sufficient precision to clearly inform the defendants of the true nature of the claim or defense.112 "In any pleading a simple statement. . . of the essential facts is sufficient."113 ; "[S]tate facts upon which the relief demanded can be granted," i.e., covering each of the necessary elements of a cause of action so as to withstand a demurrer. The Bench Book for Virginia Judges concludes that this requirement of the Rule to "state facts" means a complaint must aver facts, not mere conclusions, sufficient to support a claim for relief.114

107 Rule 3:2(b) provides: " (b) Caption. The complaint shall be captioned with the name of the court and the full style of the action, which shall include the names of all the parties. The requirements of Code § 8.01-290 may be met by giving the address or other data after the name of each defendant."

108 Rule 3:2(b). Note that under Code § 8.01-15.1 a plaintiff may proceed anonymously in certain circumstances.

109 Code § 8.01-290.

110 Rule 3:2(b).

111 Rule 1:4(d).

112 Rule 1:4(d).

113 Rule 1:4(j).

114 See Rule 1:4(d) and Code § 8.01-273. See also Code § 8.01-275, warning that the case can be stricken if counsel omit "something so essential to the action . . . that judgment, according to law and the very right of the cause, cannot be given."

- 431 - ; Include allegations of alternative facts and theories of recovery against alternative parties only to the extent that all of the claims or demands for relief so joined arise out of the same transaction or occurrence.115 ; Ask for the specific relief sought.116 ; Be succinct, since the Rules of Court "enjoin" counsel to observe that "[b]revity is . . . the outstanding characteristic of good pleading."117 ; Be "filed in good faith and not for delay."118 ; Be based on adequate legal and factual research119 ; Plead the known and necessary elements of the causes of action asserted120 ; Include the signature of counsel. A firm name may be used, but the handwritten signature of an individual member or associate must be found at the foot of the complaint, or the signature and address of an unrepresented party.121 ; Contain at its foot the office address and telephone number of the counsel of record submitting it, along with any facsimile number regularly used for business purposes by that person.122

Splitting the Cause of Action under Unified Pleading. As noted above, prior to 2006 the general rule was that a party may not, over proper objection, split a cause of action by suing initially for only part of that to which he is entitled from a single cause of action and subsequently suing the same party or his privy for the remainder. This doctrine will continue under the statutes and rules applicable in 2006, and indeed seems go gain strength from the freedom under the newly unified procedures to bring all claims the plaintiff may have in a single lawsuit. One aspect of the current doctrine merits note, however: Personal injury and property damage claims are separate causes of action under Virginia law, even if they arise out of the same event. Under new Rule 1:6 defining res judicata, effective July 1, 2006, this doctrine is preserved, in order to allow plaintiffs and insurers to settle on vehicle damage claims while personal injury issues remain unresolved.

115 Rule 1:4(k).

116 Rule 3:2.

117 Rule 1:4(k).

118 § 8.01-271.1, Rule 1:4(a), Rule 3.1, Rules of Professional Conduct.

119 § 8.01-271.1. See generally the discussion of the key "pleading" cases in sanction law of Virginia, found in Sinclair & Middleditch, VIRGINIA CIVIL PROCEDURE §11.8 (4th ed. 2003).

120 See Nedrich v. Jones, 245 Va. 465, 429 S.E.2d 201 (1993).

121 Rules 1:4(c) provides: "Counsel or an unrepresented party who files a pleading shall sign it and state his address." See also Rule 1:5.

122 Rule 1:4(l).

- 432 - Abolition of the "Notice of Motion" and "Subpoena in Chancery". As of 2006, the former summonsing document used in Virginia has changed. No longer is there a "Notice of Motion for Judgment " affixed to the charging pleading in a case at law, or a "Subpoena in Chancery" annexed to an equitable suit. Instead, the General Assembly passed statutes and the Supreme Court amended the Rules of Court to create a new paper that will subject the defendant to the jurisdiction of the trial court: the summons. The summons will be issued by the clerk just as the Notice of Motion for Judgment or Subpoena in Chancery were formerly issued.

- 433 - C. Damages and the Ad Damnum Clause

POWELL v. SEARS, ROEBUCK & COMPANY 231 Va. 464, 344 S.E.2d 916 (1986)

THOMAS, J., delivered the opinion of the Court. James D. Powell was injured when a gasoline-powered chain saw, manufactured by Roper Corporation (Roper) and sold by Sears, Roebuck and Company (Sears), "kicked- back" while in use and struck Powell in the face. Powell sued for $85,000 in compensatory damages and $100,000 in punitive damages. [Many of the exhibits centered around the Sear's "Homelite" instruction booklet, featuring many diagrams].

- 434 -

With regard to the first issue, we conclude that the trial court properly denied Powell's post-verdict motion to amend his pleadings to conform to the $250,000 verdict and improperly granted, upon reconsideration after the verdict, Powell's motion to amend his ad damnum to $185,000. The second major issue proceeds from the premise that when the case was submitted to the jury the amount of the ad damnum was $85,000. The question is whether a jury can properly return a verdict in excess of the amount sued for. The answer is no. In Virginia, a plaintiff cannot recover more than he sues for though he can recover less. Hook v. Turnbull, 10 Va. (6 Call) 85 (1806); See Georgia Home Ins. Co. v. Goode, 95 Va. 751, 30 S.E. 366 (1898).

- 435 - Damages Notes

"Collateral Source Rule" Under the collateral source rule, first recognized more than one-hundred years ago, the injured party should be made whole by the tortfeasor, not by a combination of compensation from the tortfeasor and collateral sources. The Supreme Court has held that the use of the word “reimbursement” in Code § 8.01-35 does not have the effect of altering the collateral source rule. A person reimbursed for loss of income certainly receives compensation as a result, so if there is any distinction between receiving compensation and obtaining reimbursement in the context of the collateral source rule, it is a distinction without a difference. Code § 8.01-35 provides that a plaintiff’s claim for loss of income shall not be diminished because of reimbursement “from any other source.” Correctly read, these words mean a source collateral to the defendant, i.e., a source other than the defendant. Thus, under the collateral source rule and Code § 8.01-35, compensation paid by an employer to an employee during the period of the employee’s disability is not deductible from the quantum of damages the tort feasor owes. It follows that evidence of the employee’s loss of income is admissible in evidence at trial and that, under Code § 8.01-35, the fact of any reimbursement to the employee by the employer shall not be admitted into evidence. In an important case, the Supreme Court found that whether the plaintiff continued to perform his duties as corporate president and the corporation generated income from the employees who performed drywall and plastering services as well as subcontracting work to other entitles was all irrelevant to the question whether the plaintiff’s evidence of lost income was properly excluded. The Court focused on the fact, undisputed by the defendant, that plaintiff was disabled from performing his drywall hanging and plastering duties for six months. Yet his employer continued paying him his monthly salary of $4,500 notwithstanding his inability to perform such duties. The Court held that this constituted reimbursement “from any other source” under Code § 8.01-35 that cannot be used to diminish “provable damages for loss of income . . . nor shall the fact of any such reimbursement be admitted into evidence.” Bullard v. Alfonso, 267 Va. 743, 595 S.E.2d 284 (2004). Multiple Claims and "Double Recovery." The bar against double recovery is well established in Virginia, but it has been held that in cases with multiple independent claims this bar may not require a plaintiff to elect between verdicts. The trial court need only assure that a verdict, while fully and fairly compensating a plaintiff for loss, does not include duplicative damages. In determining whether multiple damage awards constitute impermissible double recovery, the trial court must consider the nature of the claims involved, the duties imposed and the injury sustained. When the claims, duties, and injuries are the same, duplicative recovery is barred. In one case the Supreme Court found that the causes of action were not irreconcilable such as to require plaintiff to elect between them, but instead involved causes of action with different elements of proof and only potentially duplicative damage awards. In these circumstances plaintiff is entitled to full and fair compensation but not duplicative compensation. The trial court erred in requiring the plaintiff to choose between causes of action, when all that was required was supervision of the damage awards to avoid double recovery. Ultimately, plaintiff recovered compensatory

- 436 - damages under one theory, punitive damages under another, and attorneys' fees. Wilkins v. Peninsula Motor Cars, 266 Va. 558, 587 S.E.2d 581 (2003).

- 437 - Punitive Damages -- Nature of Conduct

Yes, but Limited by a Cap. In Virginia, punitive damages are capped by statute at $350,000. See Code§ 8.01-38.1: In any action accruing on or after July 1, 1988, including an action for medical malpractice under Chapter 21.1 (§ 8.01-581.1 et seq.), the total amount awarded for punitive damages against all defendants found to be liable shall be determined by the trier of fact. In no event shall the total amount awarded for punitive damages exceed $ 350,000. The jury shall not be advised of the limitation prescribed by this section. However, if a jury returns a verdict for punitive damages in excess of the maximum amount specified in this section, the judge shall reduce the award and enter judgment for such damages in the maximum amount provided by this section. Egregious Conduct Required. Punitive or exemplary damages are allowable only where there is misconduct or actual malice, or such recklessness or negligence as to evince a conscious disregard of the rights of others. Thus the Court has held that the purpose of punitive damages is not so much to compensate the plaintiff but to punish the wrongdoer and to warn others. Accordingly, punitive damages are generally not favored and should be awarded only in cases involving the most egregious conduct. Thus where the act or omission complained of is free from fraud, malice, oppression, or other special motives of aggravation, damages by way of punishment cannot be awarded, and compensatory damages only are permissible. To warrant punitive recovery, it must be shown that the defendant acted with such recklessness as to evince a conscious disregard of the plaintiffs' property rights. Xspedius Management Co. of Virginia, L.L.C. v. Stephan, 269 Va. 421, 611 S.E.2d 385 (2005) (In an action for continuing trespass to real property arising from a fiber optic cable that was buried under the land without permission, the defendant did not act with such recklessness as to evince a conscious disregard of the plaintiffs' property rights where although it did not install the cable, defendant negotiated in good faith with plaintiffs in an attempt to compensate them and took steps to begin relocating the cable once plaintiffs demanded that it be removed). Relation of Punitive to Compensatory Recovery. The Supreme Court of Virginia has held that review of the amount of punitive damages includes consideration of the reasonableness of the relationship between the damages sustained and the amount of the award and the measurement of punishment required, whether the award will amount to a double recovery, the proportionality between the compensatory and punitive damages, and the ability of the defendant to pay. Adopting the analysis of other courts around the Nation, the Supreme Court of Virginia has espoused the assessment of whether the award bears a reasonable relationship to the award of compensatory damages, and the ratio of the award to civil or criminal penalties that could be imposed for comparable misconduct. The Court has held that the reasonableness of punitive damages on a case-by-case basis, considering the relevant circumstances in each particular case. Baldwin v. McConnell, 273 Va. 650, 643 S.E.2d 703 (2007). See also Poulston v. Rock, 251 Va. 254, 263, 467 S.E.2d 479, 484 (1996).

- 438 - Thus, while the general rule is that there is no fixed standard for the measure of exemplary or punitive damages and the amount of the award is largely a matter within the discretion of the jury, several factors have been listed in opinions such as Baldwin v. McConnell to add to the general consideration of the defendant's ability to pay: 1. consideration of reasonableness between the damages sustained and the amount of the award, 2. the measurement of punishment required, 3. whether the award will amount to a double recovery, 4. the proportionality between the compensatory and punitive damages. In conducting this "proportionality review" the Supreme Court said in Baldwin that it looks to the full amount awarded by the jury as compensatory recovery, not a reduced amount which the trial judge may have required by way of remitittur. It said that the relationship between the award of $240,000 in compensatory and $100,000 in punitive damages was "not unreasonable or strikingly out of proportion." The Court commented that in one leading Virginia case the punitive damage award approved was two and one- half times (250%) the compensatory award, while here the more recent case before it the punitive damage award was less than one-half (41%) of the jury's compensatory award. Indeed, the Court cited with apparent approval the disposition by the United States Supreme Court in two prominent cases which suggested that punitive damages two, three or four times the size of the compensatory damage award accord with "longstanding historical practice" even though punitive damages which multiply the compensatory award by "single digits" are more likely to comport with due process than higher punitive awards.

- 439 - D. Commencement of the Action.

Issuance of Process by the Clerk. Filing of the complaint commences a civil suit. Plaintiff's counsel files the complaint in the clerk's office, and pays the statutory writ tax and clerk's fees. The clerk immediately issues the Summons and attaches to it a copy of the complaint. The clerk then delivers the complaint and summons for service as plaintiff directs. Rule 3:2(a) provides: Rule 3:2. Commencement of Civil Actions. (a) Commencement. — A civil action shall be commenced by filing a complaint in the clerk's office. When a statute or established practice requires, a proceeding may be commenced by a pleading styled "Petition." Upon filing of the pleading, the action is then instituted and pending as to all parties defendant thereto. The statutory writ tax and clerk's fees shall be paid before the summons is issued. New Rule 3:3, adapted from prior rules of court on both "sides" of the circuit court, provides that the clerk must receive and file all pleadings when tendered, without order of the court. The clerk is required to "note and attest the date of filing thereon." As in prior practice, if there is any controversy over whether a party who has filed a pleading has a right to file that paper, the dispute will be decided by the court and not the clerk. The complaint must state the name of the court in its caption section, along with the names of all parties plaintiff and defendant and their addresses (unless a separate memorandum has provided this information to the clerk of court). The complaint should be divided into separate, numbered paragraphs and is required to state facts rather than bald legal conclusions. The complaint is legally sufficient if it states facts that inform the defendant clearly of the nature of the claim asserted. While the cause of action for negligence may be pleaded generally (simply charging negligence conclusorily and alleging the damages) all other kinds of claims should be adumbrated with enough facts to state a cause of action. Where equitable relief, such as an injunction, is sought, the pleading should not only inform the defendant of the nature of the claim, but in addition should indicate the basis for the equity relief sought, such as irreparable harm. Provisions governing exactly what is filed to commence the action are consolidated in new Rule 3:4: Rule 3:4. Copies of Complaint. (a) Copies for Service. — Except in cases where service is waived pursuant to Code § 8.01-286.1, the plaintiff shall furnish the clerk when the complaint is filed with as many copies thereof as there are defendants upon whom it is to be served. (b) Exhibits. — It is not required that copies of exhibits filed with the complaint be furnished or served. (c) Additional copies. — A deficiency in the number of copies of the complaint shall not affect the pendency of the action. If the plaintiff fails to

- 440 - furnish the required number of copies, the clerk shall request that additional copies be furnished as needed, and if the plaintiff fails to do so promptly, the clerk shall bring the fact to the attention of the judge, who shall notify the plaintiff's counsel, or the plaintiff personally if no counsel has appeared for plaintiff, to furnish them by a specified date. If the required copies are not furnished on or before that date, the court may enter an order dismissing the suit.

Under this rule it remains the obligation of the plaintiff to furnish the clerk – at the time the case is filed -- with as many copies of the complaint as there are defendants upon whom it is to be served. The 2006 Rule is amended to include a recognition that where the new "waiver of service" procedure of Code § 8.01-286.1 is employed, the clerk will not need copies of the complaint for any cooperating defendant, since the sheriff will not make service. Rather the waiver and acceptance by any defendant obviates the need for further service steps by the plaintiff as to that defendants. On rare occasions, a plaintiff fails to provide to the clerk of court a sufficient number of copies of the complaint to permit service upon all parties named as defendants. Rule 3:4(c) provides that a "deficiency" in the number of copies of the complaint provided by the plaintiff will not "affect the pendency of the action." Rather, in such circumstances the clerk is directed by this Rule of Court to request that additional copies be furnished as needed. In the unlikely event that the plaintiff fails to promptly produce the required number of copies of the complaint, the clerk is directed to notify the appropriate judge, who in turn must give plaintiff "one more chance" by providing notice that ff the required copies are not furnished by a set date the court may enter an order dismissing the suit. Exhibits. The archaic Virginia practice of not requiring delivery to the defendants of exhibits annexed to a complaint is continued under the provisions of new Rule 3:4. A copy of each such exhibit must be filed in court with the complaint, but the rule does not require that they be served upon the defendant. This holdover from the era before copying machines were invented does not, however, preclude a plaintiff from including copies of any incorporated exhibits in the package of papers served upon a defendant, and anecdotal evidence from clerks of court indicates that most plaintiff's are now doing so. Summons. Adapting the forms previously used for the "notice of motion for judgment" and the "subpoena in chancery" to the new process labeled the "summons," under revised statutes and court rules, Rule 3:5 sets forth the format that the papers which the clerk affixes to the complaint will take. No change has been made in the process by which the summonsing instrument is issued by the clerk. The new form for 2006 is set forth in new Rule 3:5.

- 441 - Notice of Lis Pendens or Attachment.

A lis pendens notice is filed in the land records and alerts all who are on notice of such filings of pending litigation that may pose a cloud upon the title to the real estate, including liens. § 8.01-268. When and how docketed and indexed. A. No lis pendens or attachment shall bind or affect a subsequent bona fide purchaser of real or personal estate for valuable consideration and without actual notice of such lis pendens or attachment, until and except from the time a memorandum setting forth the title of the cause or attachment, the general object thereof, the court wherein it is pending, the amount of the claim asserted by the plaintiff, a description of the property, the name of the person whose estate is intended to be affected thereby, and in an action to enforce a zoning ordinance a description of the alleged violation, shall be admitted to record in the clerk's office of the circuit court of the county or the city wherein the property is located; or if it be in that part of the City of Richmond lying north of the south bank of the James River and including the islands in such river, in the clerk's office of the Circuit Court, Division I, of such city, or if it be in the part of the City of Richmond lying south of the south bank of the James River, in the clerk's office of the Circuit Court, Division II, of such city. Clerks of circuit courts are authorized and directed to admit to record memoranda of lis pendens or attachment for actions pending in any court of this Commonwealth, or in any other state, federal, or territorial court. The provisions of this section shall not be construed to mean that any such memoranda heretofore recorded are not properly of record. Such memorandum shall not be deemed to have been recorded unless and until indexed as required by law. A memorandum of lis pendens admitted to record in an action to enforce a zoning ordinance shall expire after 180 days. B. No memorandum of lis pendens shall be filed unless the action on which the lis pendens is based seeks to establish an interest by the filing party in the real property described in the memorandum, or unless the action on which the lis pendens is based seeks to enforce a zoning ordinance.

§ 8.01-269 Dismissal or Satisfaction of Same. If such attachment or lis pendens is quashed or dismissed or such cause is dismissed, or judgment or final decree in such attachment or cause is for the defendant or defendants, the court shall direct in its order (i) that the names of all interested parties thereto, as found in the recorded attachment or lis pendens be listed for the clerk, and (ii) that the attachment or lis pendens be released and, the court may, in an appropriate case, impose sanctions as provided in § 8.01-271.1. It shall then become the duty of the clerk in whose office such attachment or lis pendens is recorded, to record the order and, unless a microfilm recording process is used, to enter on the margin of the page of the book in which the same is recorded, such fact, together with a reference to the order book and page where such order is recorded. However, in any case in which an appeal or writ of error from such judgment or decree or dismissal would lie, the clerk shall not record the order or make the entry until after the

- 442 - expiration of the time in which such appeal or writ of error may be applied for, or if applied for after refusal thereof, or if granted, after final judgment or decree is entered by the appellate court. In any case in which the debt for which such attachment is issued, or suit is brought and notice of lis pendens recorded is satisfied by payment, it shall be the duty of the creditor, within ten days after payment of same to mark such notice of lis pendens or attachment satisfied on the margin of the page of the deed book in which the same is recorded, unless a microfilm recording process is used.

- 443 - E. The Basic Response Requirement

As noted in the Introduction to this volume, a responsive pleading is not always required (e.g., in the General District Court). In regular legal and equitable causes in the Circuit Court, however, a response is required. In equity this is referred to as the answer, and at law the "grounds of defense." Allegations of fact in a pleading that are not denied by the adverse pleading are deemed admitted. Rule 1:4(e). As is true in federal practice, however, a party may admit or deny averments, and may aver that the party lacks information sufficient to admit or deny. Responses. Except in the General District Court (where no defensive pleading is routinely required) a defendant must serve a response within 21 days after being served with the complaint. Rule 3:7. The response may take the form of a dispositive motion attacking the case on fundamental grounds, a motion for lesser relief, or a responsive pleading admitting or denying the averments of the complaint. If it is the latter, counterclaims and cross-claims may be pled, and non-parties may be impleaded as third-party defendants. Responsive Pleadings. The responsive pleadings recognized in Virginia are discussed in the next two sections of this Chapter. They include a variety of motions and pleas, and the core responsive instrument (the "grounds of defense" in an action at law, the "answer" in a suit in equity). Note that in Levine v. Lacy, 204 Va. 297 (1963), the Supreme Court held that a petition filed in federal court to remove the action from state to federal court was not a responsive pleading.

The governing Rule today provides as follows:

Rule 3:8. Answers, Pleas, Demurrers and Motions. (a) Response Requirement. — A defendant shall file pleadings in response within 21 days after service of the summons and complaint upon that defendant, or if service of the summons has been timely waived on request under Code § 8.01-286.1, within 60 days after the date when the request for waiver was sent, or within 90 days after that date if the defendant was addressed outside the Commonwealth. A demurrer, plea, motion to dismiss, and motion for a bill of particulars shall each be deemed a pleading in response for the count or counts addressed therein. If a defendant files no other pleading than the answer, it shall be filed within said time. An answer shall respond to the paragraphs of the complaint. A general denial of the entire complaint or plea of the general issue shall not be permitted. (b) Response After Demurrer, Plea or Motion. — When the court has entered its order overruling all motions, demurrers and other pleas filed by a defendant, such defendant shall, unless the defendant has already done so, file an answer within 21 days after the entry of such order, or within such shorter or longer time as the court may prescribe.

- 444 -

Operation of the Answer Rule in Part Three of the Rules Today

General Timetable for Response. Under Rule 3:8(a) the defendant must file pleadings in response to the complaint within 21 days after service upon that defendant. By statute, if service is "waived" by the defendant a period of 60 days from the date of mailing of the waiver request will be afforded to the defendant in which to answer (90 days if the defendant is outside the geographical boundaries of the Commonwealth). See generally Code § 8.01-286.1. Responsive Pleadings Defined. New Rule 3:8(a) defines the responsive pleadings that will satisfy a defendant's obligations within the 21-day period for a response to include: "A demurrer, plea, motion to dismiss, and motion for a bill of particulars." Each of these devices is "deemed a pleading in response for the count or counts addressed therein." As was true under amendments made in recent years to prior practice, under the new Rule if a defendant "files no other pleading than the answer," it must be filed within the basic 21-day period after service of process upon that defendant. Timetable After Other Filings. Where a defendant has interposed a demurrer, plea or motion in the first instance, in lieu of lodging the answer itself, Rule 3:8(b) continues prior practice by setting up an automatic 21-day grace period that starts to run on the day following the entry of an order overruling the other pleadings that have been interposed. Rule 3:8(b) provides that "[w]hen the court has entered its order overruling all motions, demurrers and other pleas filed by a defendant, such defendant shall, unless the defendant has already done so, file an answer within 21 days after the entry of such order, or within such shorter or longer time as the court may prescribe." As noted, this pre-established commencement of the 21-day period for filing an answer under Rule 3:8(b) means that it is not necessary for the court in denying a plea or demurrer to expressly declare that a defendant's time to answer has started to run. Rather, the time period is set by the Rule itself, and no separate court order is needed. As a result, when there is a plea, dispositive motion or demurrer sub judice, counsel for the defendant will need to monitor the court's activities so as to become aware of any ruling in a timely fashion, in order to meet the short period thereafter for filing the answer. Rule 3:8(b) does empower the trial court to fix a different period for filing the answer. By contrast, there is no power conferred under the Rules for the Court to shorten the period for response when there has been no special plea, motion, or demurrer lodged. Rule 1:9, which deals with deadlines under the pleading rules, allows the court to extend timetables, but does not provide any express authority for the trial judge to shorten the basic periods for response as established in other rules. Thus it appears that only in the situation where a plea or motion has been interposed can the court can take cognizance of the parties' submissions and perhaps presence at court proceedings to direct a shorter or longer period for filing a response as the circumstances appear to require.

- 445 - The response may take the form of a dispositive motion or plea attacking the case on fundamental grounds or a responsive pleading admitting or denying the averments of the complaint. The responsive pleadings recognized in Virginia include a variety of motions and pleas, and the core responsive instrument (now called the answer in all cases) The Basic Response Requirement. In all legal and equitable causes in the Circuit Court where service of process has been either completed or waived, a response is required. In equity this was traditionally referred to as the answer, and at law the "grounds of defense." Under the 2006 reforms, the responsive pleading in all civil litigation is called the Answer. Responses. In Circuit Court a defendant must serve a response within 21 days after being served with the complaint. Rule 3:7. The response may take the form of a dispositive motion attacking the case on fundamental grounds, a motion for lesser relief, or a responsive pleading admitting or denying the averments of the complaint. If it is the latter, counterclaims and cross-claims may be pled, and non-parties may be impleaded as third-party defendants.

- 446 - F. Significant Motions and Demurrer

There are five key motions available in Virginia practice which may be used in response to the service of a complaint. All are subject to the sanction provisions of § 8.01-271.1 and the pleading representation of Rule 1:4(a) that they are interposed in good faith and not for delay. Hence care should be expended to assure that the motions are properly grounded in the law and the facts of the case. The motions are:

♦ motion to dismiss for lack of subject matter jurisdiction. ♦ motion to dismiss for lack of personal jurisdiction. ♦ motion to dismiss for improper venue (realistically, seeking transfer to a proper venue). ♦ a demurrer. ♦ motion for a Bill of Particulars.

Motions Challenging Subject Matter Jurisdiction

A motion challenging the court's exercise of subject matter jurisdiction over a lawsuit may be raised by motion at any time, (§ 8.01-276) and indeed it is said that it may be raised on either direct or collateral attack. See Goranson v. Capital Airlines, 221 F. Supp. 820 (E.D. Va. 1963).

§ 8.01-276. Demurrer to Evidence and Plea in Abatement Abolished; Motion to Strike Evidence and Written Motion, respectively, to be used in lieu thereof. Demurrers to the evidence and pleas in abatement are hereby abolished. Any matter that heretofore could be reached by a demurrer to the evidence may hereafter be subject to a motion to strike the evidence. Any defense heretofore required or permitted to be made by plea in abatement may be made by written motion stating specifically the relief demanded and the grounds therefor. Except when the ground of such motion is the lack of the court's jurisdiction over the person of an indispensable party, or of the subject matter of the litigation, such motion shall be made within the time prescribed by Rules of the Supreme Court. If the motion challenges the venue of the action, the movant shall state therein why venue is improperly laid and what place or places within the Commonwealth would constitute proper venue for the action.

- 447 - Motions Challenging Personal Jurisdiction

A motion to dismiss challenging the court's continued exercise of jurisdiction where an indispensable party is not participating may be filed. By statute in Virginia it appears that this motion may be raised at any time. See Code § 8.01-276. There is not a single reported case on this issue, however. Challenges to personal jurisdiction may be filed in a Motion to Quash, either prior to or filed simultaneously with a pleading to the merits.

§ 8.01-277 Defective process; motion to quash; untimely service; motion to dismiss A. A person, upon whom process to answer any action has been served, may take advantage of any defect in the issuance, service or return thereof by a motion to quash filed prior to or simultaneously with the filing of any pleading to the merits. Upon sustaining the motion, the court may strike the proof of service or permit amendment of the process or its return as may seem just. B. A person, upon whom process has not been served within one year of commencement of the action against him, may make a special appearance, which does not constitute a general appearance, to file a motion to dismiss. Upon finding that the plaintiff did not exercise due diligence to have timely service and sustaining the motion to dismiss, the court shall dismiss the action with prejudice. Upon finding that the plaintiff did exercise due diligence to have timely service and denying the motion to dismiss, the court shall require the person filing such motion to file a responsive pleading within 21 days of such ruling. Nothing herein shall prevent the plaintiff from filing a nonsuit under § 8.01-380 before the entry of an order granting a motion to dismiss pursuant to the provisions of this section. Nothing in this subsection shall pertain to cases involving asbestos.

Motions Challenging Venue

A motion challenging the venue laid by the plaintiff may be filed in the court where the action is pending. The application must, under the terms of § 8.01-276, state why venue is improper in the district where the action has been filed and, further, must indicate "what place or places within the Commonwealth would constitute proper venue for the action." By this provision the code leads the parties and the court to the accomplishment of what §8.01-264 and -265 [set forth in the venue chapter] contemplate, which is that objections to venue will be promptly heard but no action will be dismissed for a venue defect. Rather, if it is determined that the suit belongs elsewhere, it is to be transferred to a correct forum. See Chapter 5, VENUE AND FORUM NON CONVENIENS.

- 448 - Demurrer – The Standard and its Applications

A demurrer is a pleading which challenges the legal sufficiency of the adversary's pleadings in the case, admitting as true for purposes of the application all material facts that are "well pleaded". Bellamy v. Gates, 214 Va. 314, 200 S.E.2d 533 (1973). See § 8.01-273. The device is somewhat similar to a motion to dismiss in federal practice under F.R.Civ.P. 12(b)(6) for failure to state a claim upon which relief can be granted. A demurrer is available in all actions, whether based on legal or equitable claims. It is generally directed to the plaintiff's pleadings, as it focuses on failure to state a cause of action or state facts upon which relief can be granted. The parallel motion to strike, § 8.01-274, permits a similar motion made against a defensive pleading which is argued to be "insufficient", presumably because it fails to plead a viable defense. A demurrer reaches only matters apparent on face of plaintiff's pleading (and those made a part thereof by reference to exhibits filed, or by a process known as Oyer, a motion to have a document or other item tendered to the court). Reference to additional factual materials is not permitted in the demurrer, though a motion for summary judgment may lie if reference to verifiable facts shows that the movant is entitled to judgment as a matter of law and that there are no material facts in dispute on the necessary element or elements. An issue such as the statute of limitations will normally involve factual material, and is raised as an affirmative defense in a responsive pleading; it may thereafter be appropriate for summary judgment if the facts are clear. While a demurrant is held to admit all material facts which are properly pleaded in the attacked pleading, the plaintiff's conclusions of law are not deemed admitted for purposes of evaluating the demurrer. See Walker & Laberge Co. v. First Nat'l Bank of Boston, 206 Va. 683, 146 S.E.2d 239 (1966) (lack of consideration and fraud); Caplan v. Stant, 207 Va. 933, 154 S.E.2d 121 (1967) (alleging that a person is a "surety"). Inferences which happen to have been drawn or stated by the pleader may not be deemed admitted, but those inferences which are fairly and justly warranted from the facts alleged will be assumed in the process of testing the sufficiency of plaintiff's pleading. Walker, supra. Burns v. Board of Supervisors of Fairfax Co., 218 Va. 625, 238 S.E.2d 823 (1977). All of the facts and inferences taken as true in order to rule upon the demurrer are deemed admitted for that purpose only. A demurrer is required to state the grounds for entry of judgment in writing, and only those stated in the demurrer will be considered. See § 8.01-273. Klein v. National Toddle House Corporation, 210 Va. 641, 172 S.E.2d 782 (1970); Chippenham Manor, Inc. v. Dervishian, 214 Va. 448, 201 S.E.2d 794 (1974). Thus, if motion practice on the demurrer identifies a new defect in the plaintiff's case, defendant will need to amend the demurrer. Among the issues that may be reached by demurrer, in addition to failure to state a cause of action, are serious misjoinder of causes of action (and multifariousness in equity), existence of an adequate legal remedy barring an equitable action, constitutionality of a law, and sometimes laches.

- 449 - A demurrer is commonly filed by itself, but it is permissible to file it at the same time as other pleadings. Matthews v. Jenkins, 80 Va. 463 (1885). If grounds of defense have already been filed, leave of court is required for filing a demurrer. If the demurrer is granted a plaintiff may be accorded leave to re-plead in light of the ruling. Where the basis for the demurrer is not curable, the grant thereof by the trial court may lead to entry of a final judgment, one which will be res judicata if any future suit is brought on the same claims. Denial of a demurrer means that the case continues. Defendant may be able to make other preliminary motions, but there is no appeal of the denial of a demurrer on an interlocutory basis except in the rare equitable action where the demurrer ruling amounts to adjudication of the central principles of a cause. § 8.01-670. See Richardson v. Bowcock, 213 Va. 141, 191 S.E. 238 (1972). Standard Applied on Appeal. The Supreme Court has held that "[A] plaintiff challenging on appeal the sustaining of a defendant's demurrer by the trial court need show only that the trial court erred in finding that the pleading failed to state a cause of action, and not that the plaintiff would have prevailed on the merits of that cause." Thus it is the Court's practice when the circuit court decided the case on demurrer to "recite as true the well-pleaded facts." In the process, the Court will "look solely" at the plaintiff's allegations in the complaint, and any exhibits mentioned in the challenged pleading. Faulknier v. Shafer, 264 Va. 210, 563 S.E.2d 755 (2002), citing Thompson v. Skate America, Inc., 261 Va. 121, 125-28, 540 S.E.2d 123, 124-27 (2001); Perk v. Vector Resources Group, Ltd., 253 Va. 310, 312, 485 S.E.2d 140, 142 (1997); Flippo v. F & L Land Co., 241 Va. 15, 17, 400 S.E.2d 156, 156 (1991) and Rule 1:4(i). When a circuit court sustains a demurrer to an amended pleading which is "complete in itself and fails to incorporate by reference allegations in earlier pleadings," the Supreme Court has held that it will consider "only the allegations contained in the amended pleading that was the subject of the demurrer sustained by the judgment appealed from." McMillion v. Dryvit Systems, Inc., 262 Va. 463, 552 S.E.2d 364 (2001), citing Bell Atlantic-Virginia, Inc. v. Arlington County, 254 Va. 60, 63 n.2, 486 S.E.2d 297, 299 n.2 (1997); Norfolk & W. Ry. Co. v. Sutherland, 105 Va. 545, 549-50, 54 S.E. 465, 466 (1906). Most of the important demurrer principles are set forth in case law, but there are two statutes of note, one addressing demurrers and the other concerning motions to strike: § 8.01-273 Demurrer; Form; Grounds to be Stated; Amendment. A. In any suit in equity or action at law, the contention that a pleading does not state a cause of action or that such pleading fails to state facts upon which the relief demanded can be granted may be made by demurrer. All demurrers shall be in writing and shall state specifically the grounds on which the demurrant concludes that the pleading is insufficient at law. No grounds other than those stated specifically in the demurrer shall be considered by the court. A demurrer may be amended as other pleadings are amended. * * * *

- 450 -

§ 8.01-274 Motion to Strike Defensive Pleading in Equity and at Law; Exceptions Abolished. Exceptions to answers for insufficiency are abolished. The test of the sufficiency of any defensive pleading in any suit in equity or action at law shall be made by a motion to strike; if found insufficient, but amendable, the court may allow amendment on terms. If a second pleading is adjudged insufficient, the court may enter such judgment or decree or take such other action that it deems appropriate.

- 451 - PERK v. VECTOR RESOURCES GROUP 253 Va. 310, 485 S.E.2d 140 (1997)

JUSTICE STEPHENSON delivered the opinion of the Court: The principal issue in this appeal is whether the trial court erred in sustaining the defendants' demurrer to the plaintiff's motion for judgment. On June 21, 1990, Leo J. Perk, a practicing attorney at law, filed a multi-count motion for judgment against Vector Resources Group, Ltd. (Vector), Charles Michael Monahan, a Vector employee, and the law firm known as Sheffield & Bricken, P.C. (the Firm) (collectively, the Defendants). As this case was decided on demurrer, we look solely at Perk's allegations in his motion for judgment to determine whether he stated a cause of action because "[a] demurrer admits the truth of all material facts that are properly pleaded." Bowman v. State Bank of Keysville, 229 Va. 534, 536, 331 S.E.2d 797, 798 (1985). The facts admitted as true are (1) those expressly alleged, (2) those which are by fair intendment impliedly alleged, and (3) those which may be fairly and justly inferred from the facts alleged. Id. Perk entered into an at-will contract with Tidewater Memorial Hospital, Inc. (Tidewater) to undertake the collection of Tidewater's more than 3,000 delinquent accounts receivable. Sometime thereafter, Tidewater was acquired by what is now Riverside Tappahannock Hospital, Inc. (Riverside). The collection contract continued with Riverside for a period of time without change. On November 10, 1989, however, Riverside terminated the contract and instructed Perk to forward all payments thereafter received by him directly to Riverside without any fee deduction. Riverside also instructed Perk to deliver all the delinquent accounts to either it or Monahan. [Perk sued, charging the defendants with various torts in messing up his deal with the hospitals. Ed.] We now consider whether the allegations in Counts III through VI of Perk's motion for judgment were sufficient to withstand the Defendants' demurrer. A Count III is a claim of tortious interference with a contract. The requisite elements for a prima facie showing of a tortious interference with an at-will contract are: "(1) the existence of a valid contractual relationship or business expectancy; (2) knowledge of the relationship or expectancy on the part of the interferor; (3) intentional interference inducing or causing a breach or termination of the relationship or expectancy; and (4) resultant damage to the party whose relationship or expectancy has been disrupted." Duggin v. Adams, 234 Va. 221, 226, 360 S.E.2d 832, 835 (1987) (quoting Chaves v. Johnson, 230 Va. 112, 120, 335 S.E.2d 97, 102 (1985)). Where a contract is terminable at will, however, "a plaintiff, in order to present a prima facie case of tortious interference, must allege and prove not only an intentional interference that caused the termination of the at-will contract, but also that the defendant employed 'improper

- 452 - methods.'" 234 Va. 221 at 226-27, 360 S.E.2d at 836 (quoting Hechler Chevrolet v. General Motors Corp., 230 Va. 396, 402, 337 S.E.2d 744, 748 (1985)). Methods considered "improper" include those that are illegal or independently tortious. Id. at 227, 360 S.E.2d at 836. Obviously, the requisite improper methods must have occurred prior to the termination of the contract in order to constitute the cause of the termination. See Hilb, Rogal and Hamilton Company v. DePew, 247 Va. 240, 246 n.4, 440 S.E.2d 918, 922 n.4 (1994). In the present case, the improper methods upon which Perk relies are "the acts of the Defendants . . . as further alleged;" i.e., the alleged theft by Monahan and the Firm and the alleged defamation by the Firm. These allegedly illegal or tortious acts, however, occurred after the termination of the contract and cannot serve as the basis for Perk's claim of intentional interference with his contract. Therefore, the trial court properly sustained the Defendants' demurrer with respect to Count III. B We next consider Count IV of the motion for judgment. In this count, Perk alleges the theft or conversion by Monahan and the Firm of his computer programs, data, and software. Perk also alleges that he has lost the value of his efforts in creating the converted items, the fair market value of the items, and future profits. Pursuant to Code § 18.2-152.8 of the Virginia Computer Crimes Act, Code § 18.2- 152.1 et seq., "computer data, computer programs, [and] computer software" are "personal property subject to embezzlement" for the purposes of Code § 18.2-111. Clearly, Count IV alleges that Monahan and the Firm stole or converted such personal property belonging to Perk. Monahan and the Firm assert, nonetheless, that the items allegedly converted are "nothing more than lists" of Riverside's debtors, which belong solely to Riverside; that Perk consented to the taking of the items; and that the lists were of no value to Perk once the contract had been terminated. The character of the items allegedly converted and the question whether these items had value to Perk aside from his contractual obligations and professional services to Riverside are, however, matters of proof which cannot be decided by demurrer. We conclude, therefore, that Count IV states a cause of action. Consequently, we hold that the trial court erred in sustaining the demurrer as to Count IV. C In Count V, Perk alleges that the Firm defamed him by telling some of Riverside's debtors that certain payments the debtors had made to Perk had not been reported to Riverside by Perk. Perk further alleges that the statements were not true and the Firm knew or should have known that they were untrue. He also claims that the statements adversely affected his reputation for honesty and integrity, adversely reflected on his abilities as a practicing attorney at law, and were "defamatory and slanderous per se." As a direct result of these statements, Perk asserts, he suffered "damage to his professional reputation, humiliation, and extreme mental anguish."

- 453 - At common law, defamatory words which are actionable per se are: (1) Those which impute to a person the commission of some criminal offense involving moral turpitude, for which the party, if the charge is true, may be indicted and punished. (2) Those which impute that a person is infected with some contagious disease, where if the charge is true, it would exclude the party from society. (3) Those which impute to a person unfitness to perform the duties of an office or employment of profit, or want of integrity in the discharge of the duties of such an office or employment. (4) Those which prejudice such person in his or her profession or trade. Carwile v. Richmond Newspapers, 196 Va. 1, 7, 82 S.E.2d 588, 591 (1954). In addition, a defamatory charge need not be made in direct terms; rather, it may be made "by inference, implication[,] or insinuation." Id., 82 S.E.2d at 592. However, the meaning of the alleged defamatory charge "cannot, by innuendo, be extended beyond its ordinary and common acceptation." Id. at 8, 82 S.E.2d at 592. Moreover, innuendo cannot be employed to "introduce new matter, nor extend the meaning of the words used, or make that certain which is in fact uncertain." Id. We do not think the alleged statements that some payments had not been reported to Riverside by Perk are defamatory per se. We also do not think that a defamatory charge can be inferred from the statements. To infer such would extend the meaning of the words used beyond their ordinary and common acceptance. Therefore, we conclude that the alleged statements are not sufficiently defamatory on their face to permit a fact finder to decide whether in fact the statements were actually defamatory. See The Gazette v. Harris, 229 Va. 1, 29, 325 S.E.2d 713, 733 (1985). Consequently, the trial court properly sustained the demurrer as to Count V. D The final count in the motion for judgment, Count VI, alleges that all the Defendants conspired to injure Perk in his profession. Perk, however, also repeatedly alleges that a principal-agent or an employer-employee relationship existed between the several Defendants, and, therefore, the Defendants are not separate entities. As we have held, an entity cannot conspire with itself. Charles E. Brauer Co. v. NationsBank, 251 Va. 28, 36, 466 S.E.2d 382, 387 (1996); Fox v. Deese, 234 Va. 412, 428, 362 S.E.2d 699, 708 (1987). Thus, a conspiracy among the Defendants was legally impossible. Therefore, the trial court properly sustained the demurrer to Count VI. Accordingly, the trial court's judgment will be affirmed in part, reversed in part, and the case remanded for further proceedings consistent with this opinion.

- 454 - Craving Oyer

WARD'S EQUIPMENT v. NEW HOLLAND NORTH AMERICA 254 Va. 379, 493 S.E.2d 516 (1997)

JUSTICE COMPTON delivered the opinion of the Court: In this controversy arising from a written contract between a manufacturer and a dealer in farm equipment, the case turns upon whether a party suing for damages may allege facts that essentially reform the contract and thereby withstand demurrer. In June 1995, appellants Ward's Equipment, Inc., Carl Ward, and Anne Ward (collectively, the dealer) sued appellee New Holland North America, Inc., successor to Ford New Holland, Inc. (the manufacturer or the company). The dealer is a Virginia corporation with its principal place of business in South Boston. The manufacturer is a Delaware corporation with its principal place of business in New Holland, Pennsylvania. In a "bill of complaint" filed on the chancery side of the court below, the dealer sought compensatory and punitive damages for alleged breaches of contract and alleged tortious activity, and asked for a trial by jury. Attached as the only exhibit to the dealer's pleading is a letter dated October 3, 1994 from the manufacturer to the dealer discussing the parties' obligations under a Dealer Agreement. The dealer did not incorporate the terms of the Dealer Agreement in its "bill of complaint." Responding, the manufacturer filed a demurrer and a motion craving oyer. Among the grounds of the demurrer, the manufacturer asserted the trial court "lacks equity jurisdiction in that Plaintiffs have a complete and adequate remedy at law." The trial court never was asked to rule on this ground. In the motion craving oyer, the manufacturer asserted that the dealer's complaint "identifies and characterizes, but fails to include, the written Dealer Agreement" between the parties dated August 14, 1987. The motion further stated: "It is necessary and proper for the Dealer Agreement and Schedule C thereto to be produced, oyer taken of it and that it becomes per se a matter of record for the consideration of this Court on New Holland's demurrer, and for all other purposes as if copied at large in Plaintiffs' Bill of Complaint." Concluding, the manufacturer asked the court to order a complete copy of the Dealer Agreement filed, to be "deemed an exhibit to Plaintiffs' Bill of Complaint." The motion was unopposed and was granted during a July 1996 hearing on the demurrer. Following oral argument, the trial court sustained the demurrer and denied the dealer's motion for leave to file an amended complaint. We awarded the dealer an appeal from the trial court's September 1996 final order dismissing the action with prejudice. Settled criteria governing a trial court's consideration of a demurrer should be reviewed. A demurrer admits the truth of all properly pleaded material facts. "All reasonable factual inferences fairly and justly drawn from the facts alleged must be considered in aid of the pleading. However, a demurrer does not admit the correctness

- 455 - of the pleader's conclusions of law." Fox v. Custis, 236 Va. 69, 71, 372 S.E.2d 373, 374 (1988). When a demurrant's motion craving oyer has been granted, the court in ruling on the demurrer may properly consider the facts alleged as amplified by any written agreement added to the record on the motion. Hechler Chevrolet, Inc. v. General Motors Corp., 230 Va. 396, 398, 337 S.E.2d 744, 746 (1985). Furthermore, and significant in this appeal, a court considering a demurrer may ignore a party's factual allegations contradicted by the terms of authentic, unambiguous documents that properly are a part of the pleadings. See Fun v. Virginia Military Inst., 245 Va. 249, 253, 427 S.E.2d 181, 183 (1993). No useful purpose will be served by summarizing in detail the dealer's 105- paragraph, 29-page complaint. It is sufficient to observe that the dealer mounts a broadside attack on the manufacturer as the result of a business decision made by the manufacturer and expressed in the October 3 letter, a so-called "attrition letter." In that letter, the dealer was notified that the manufacturer's "current market representation plan contemplates no dealer at your Dealer Location. While we will continue to do business as normal with you under the terms of the Dealer Agreement, we will not consent to the sale or assignment of your Dealer Agreement. . . ." The dealer alleged that, at the time of this notice, it was negotiating a purchase agreement with a Ward family member, and that the notice severely restricted or eliminated the dealer's ability to consummate the contemplated transaction. The dealer also alleged that shortly after sending the attrition letter, the manufacturer entered into an agreement with one of the dealer's competitors, located 15 miles from the dealer, to begin selling equipment previously available in its trade area only at the dealer's location. Thus, arising from this climate of keen business competition, the dealer sought damages in a 12-count complaint. Many of the counts have been abandoned; those still viable are labelled "Breach of Contract," "De Facto Termination," "Fraud and Misrepresentation," "Estoppel," "Violation of Michigan Statutes," and "Violation of Virginia Statutes." On appeal, the dealer contends the trial court erred in sustaining the demurrer "by considering questions of fact not in the record." There is no merit to this contention. The dealer points to a comment made by the trial judge from the bench during the course of sustaining the demurrer. The court said the complaint failed to allege the manufacturer had engaged in any conduct that was not "authorized" or "anticipated" under the terms of the unambiguous August 1987 contract. This observation did not amount to a consideration of facts not of record. Rather, the ruling demonstrates that the trial court followed the foregoing criteria, which apply when a contract is part of the

- 456 - pleadings. The court merely was describing a situation in which the dealer has ignored the contract's language in asserting claims that the contract refutes. Next, the dealer argues the trial court erred by ignoring facts it alleged in support of its assertion that the manufacturer breached the contract. The dealer asserted the contract breach occurred when the manufacturer "terminated" the dealership without cause, unreasonably withheld consent to the dealer's sale or assignment of the dealership, failed to deliver equipment to it in a timely manner, encroached upon its "exclusive market area," and sought to replace it with a competitor. The trial court was justified in refusing to accept these factual allegations as true because they are refuted by the terms of the authentic, unambiguous documents that are a part of the pleadings. The contract in issue consists of a two-page "Dealer Agreement" and a nine-page document labelled "Dealer Agreement Standard Provisions" to which is attached three pages of "schedules." . . . . Relevant to the dealer's breach-of-contract argument, the Agreement makes clear that the dealer's appointment is as a "nonexclusive authorized dealer" and that likewise the dealer's trade area, designated in the contract as "Primary Area of Responsibility," (PAR) is not exclusive to the dealer. Indeed, paragraph 18(a) of the Standard Provisions gives the manufacturer the absolute right to alter the dealer's PAR and to appoint additional dealers within that area. Additionally, the dealer's claim that it has been "terminated" is contradicted by the plain language of the contract as amplified by the attrition letter. Consistent with the manufacturer's absolute rights set forth in paragraph 18(a), the letter clearly explained that it was "not a termination notice," indicating the manufacturer would continue to do business as normal with the dealer. . . . Finally, the dealer argues that the trial court erred in refusing to grant the motion for leave to amend the complaint. We hold the court did not abuse its discretion in so ruling. A trial court may properly deny a motion for leave to amend when it is apparent that such an amendment would accomplish nothing more than provide opportunity for reargument of questions already decided. Hechler Chevrolet, 230 Va. at 403, 337 S.E.2d at 749. This is such a case. Consequently, we conclude there is no error in the judgment appealed from, and it will be Affirmed.

- 457 -

Notes on Demurrer Practice

Demurrer after General Response. By tradition in Virginia, a defendant may simultaneously file various pleas and responses. A demurrer is normally filed prior to the lodging of a grounds of defense or answer. It is thought that once those pleadings have been filed, a demurrer would be inappropriate. However, consider whether a demurrer raising a defect in subject matter jurisdiction could be heard even after a general answer had been filed.

Leave to Amend? The Supreme Court has held that it is an abuse of discretion for the trial court to deny leave to amend after a demurrer is sustained if there has not previously been an effort to amend and if the defendant cannot show prejudice it has incurred as a result of the late amendment. Mortarino v. Consultant Engineering Services, 251 Va. 289, 467 S.E.2d 778 (1996).

- 458 - G. When a Complaint Has been Amended – What is Reviewed on Appeal?

BREEDING v. HENSLEY 258 Va. 208, 519 S.E.2d 369 (1999)

[A minor plaintiff was injured while riding a bicycle when she struck a trash dumpster allegedly interfering with the roadway as a result of defendant's negligence in allowing a nuisance. The claim was dismissed on demurrer. There had been several pleadings, and the Court commented as follows]: Before embarking upon an analysis of the issues in this appeal, a comment on the state of the appellate record is necessary. The litigation has been pending for more than six years. The manuscript record of the two cases contains 913 pages, excluding exhibits, reports of experts, and transcripts of depositions and hearings. The record contains extensive discovery material and affidavits of witnesses. We mention this glut of information in a matter decided on the pleadings to point up the fact that the record contains a profusion of facts that are not included in the plaintiffs' motions for judgment. Yet the parties on brief argue the issues as if all the facts outside the pleadings are properly before this Court; they are not. Therefore, we must focus upon only the pleadings' factual allegations. "A demurrer admits the truth of all material facts properly pleaded. Under this rule, the facts admitted are those expressly alleged, those which fairly can be viewed as impliedly alleged, and those which may be fairly and justly inferred from the facts alleged." Rosillo v. Winters, 235 Va. 268, 270, 367 S.E.2d 717, 717 (1988). In the plaintiffs' amended Count II, all the factual allegations from the original Count II (which expressly incorporated by reference most of the factual allegations of original Count I) were not included. Under these circumstances, another rule impacting consideration of demurrers becomes pertinent. When an amended motion for judgment, or amended count thereof, is filed and a comparison of the original and amended pleading shows that the amended motion for judgment, or amended count, was intended as a substitute for the original, the case stands as though the original had never been filed, so far as it relates to the statement of facts. Trotter v. E.I. Dupont de Nemours and Co., 124 Va. 680, 682-83, 98 S.E. 621, 622 (1919). See Washington S. Ry. Co. v. Cheshire, 109 Va. 741, 743, 65 S.E. 27, 28 (1909). In the present case, due to the variance between the respective allegations, it is apparent that the plaintiffs intended amended Count II as a substitute for original Count II. Hence, in order to determine whether the allegations of public nuisance are sufficient to withstand demurrer, we shall examine only the facts asserted in amended Count II and in the second motion for judgment.

- 459 -

BELL ATLANTIC-VIRGINIA, INC. v. ARLINGTON COUNTY 254 Va. 60, 486 S.E.2d 297 (1997)

[In an inverse condemnation action, where a landowner charges that the state has in effect “taken” property without just compensation, the Court made the following comments pertinent to the litigation of special pleas and demurrers:]

In the present case, the County did not present any evidence in support of its plea in bar. Therefore, in deciding both the plea in bar and the County's demurrer, we, like the trial court, must confine our consideration to the allegations contained in Bell Atlantic's second amended motion for judgment.126 . . . . From the allegations contained in the second amended motion for judgment, it is clear that Bell Atlantic states a claim for just compensation under Article I, Section 11 of the Constitution of Virginia.127 Therefore, the trial court erred in sustaining the County's plea in bar and demurrer. Consequently, we will reverse the trial court's judgment and remand the case for further proceedings.

______

Fascinating Query There are a number of decisions making recitations like those in the two cases above. How do you square the above cases with the following two statutes, one which provides very broad general protection, and the second of which in subsection (B) seems right on point:

§ 8.01-384. Formal exceptions to rulings or orders of court unnecessary; motion for new trial unnecessary in certain cases A. Formal exceptions to rulings or orders of the court shall be unnecessary; but for all purposes for which an exception has heretofore been necessary, it shall be sufficient that a party, at the time the ruling or order of the court is made or sought, makes known to the court the action which he desires the court to take or his objections to the action of the court and his

126 The County contends that, in deciding this case, we should consider allegations made by Bell Atlantic in its original motion for judgment and amended motion for judgment. We do not agree. Demurrers and pleas in bar were sustained as to those pleadings. Thereafter, with leave of court, Bell Atlantic filed its second amended motion for judgment. In so doing, it did not incorporate or refer to any of the allegations that were set forth in its original or amended motions for judgment. The trial court based its decision "on [the County's] Demurrer and Special Plea in Bar to the Second Amended Motion for Judgment," and we cannot do otherwise (emphasis added). See Norfolk & W.R. Co. v. Sutherland, 105 Va. 545, 549-50, 54 S.E. 465, 466 (1906).

127 We express no opinion, however, whether such a claim will be viable after the facts are fully developed by the evidence.

- 460 - grounds therefor; and, if a party has no opportunity to object to a ruling or order at the time it is made, the absence of an objection shall not thereafter prejudice him on motion for a new trial or on appeal. No party, after having made an objection or motion known to the court, shall be required to make such objection or motion again in order to preserve his right to appeal, challenge, or move for reconsideration of, a ruling, order, or action of the court. No party shall be deemed to have agreed to, or acquiesced in, any written order of a trial court so as to forfeit his right to contest such order on appeal except by express written agreement in his endorsement of the order. Arguments made at trial via written pleading, memorandum, recital of objections in a final order, oral argument reduced to transcript, or agreed written statements of facts shall, unless expressly withdrawn or waived, be deemed preserved therein for assertion on appeal. B. The failure to make a motion for a new trial in any case in which an appeal, writ of error, or supersedeas lies to or from a higher court shall not be deemed a waiver of any objection made during the trial if such objection be properly made a part of the record.

§ 8.01-273. Demurrer; form; grounds to be stated; amendment * * * * B. Wherever a demurrer to any pleading has been sustained, and as a result thereof the demurree has amended his pleading, he shall not be deemed to have waived his right to stand upon his pleading before the amendment, provided the order of the court shows that he objected to the ruling of the court sustaining the demurrer. On any appeal of such a case the demurree may insist upon his original pleading, and if the same be held to be good, he shall not be prejudiced by having made the amendment.

- 461 - H. Motion for a Bill of Particulars

Overview A party may make a motion for a Bill of Particulars, seeking the equivalent of the "more definite statement" of a party's position that is obtainable in federal practice under Rule 12(e) of the F.R.Civ.P. While a plaintiff may seek a Bill of Particulars from defendant, the majority of such motions are made by defendants seeking illumination of the averments in a plaintiff's complaint. Whether a pleading is opaque or elliptical enough to warrant the preparation of a Bill of Particulars is within the sound discretion of the trial court to determine, though there are cases which have found that discretion abused for failure to order service of particulars where the case warranted it. See City of Portsmouth v. Weiss, 145 Va. 94, 133 S.E. 781 (1926). Under Rule 3:7 a party is afforded "two chances" to respond with particulars. If the second Bill of Particulars fails to inform the adverse party of the true nature of the case, the particulars and the original pleading may be stricken. See Marshall v. Dean, 201 Va. 699, 112 S.E.2d 895 (1960). Negligence cases. Because of the familiarity of most circumstances litigated in negligence cases, a plaintiff need not specify particulars in the original pleading. Rule R 3:18(b). Cf. Ragsdale v. Jones, 202 Va. 278, 117 S.E.2d 114 (1960) (plaintiff need not have specified negligence by driving under the influence of alcohol). A defendant in such a case may request a Bill of Particulars specifying the basis for the allegation of negligence (and a plaintiff charged tersely with contributory negligence may do the same as to that averment). General District Court. Code §16.1-69.25:1 provides that a judge of a district court may direct the filing of a written bill of particulars at any time before trial and within a period of time specified in the order so requiring. Motions for bills of particulars in criminal cases before general district courts shall be made before a plea is entered and at least seven days before the day fixed for trial.

Bill of Particulars Mechanics

In an interesting development, the 2006 Rules amendments make the bill of particulars device available in all cases, including equitable claims where it was not previously authorized. In fact a bill of particulars had been used a few times in the last 100 years in equitable proceedings, and the rules drafters decided that there was no impediment to formally making this tool available in all civil cases. A bill of particulars is a supplemental form of pleading by which a party furnishes details about the averments in a complaint. It is obtained under new Rule 3:7 upon the granting by the trial court of a motion by the defendant for amplification of a complaint that may have been too terse or elliptical initially.

- 462 - Rule 3:7, collecting and organizing principles for bills of particulars, now reads:

Rule 3:7. Bills of Particulars. (a) Timing and Grounds. — On motion made promptly, a bill of particulars may be ordered to amplify any pleading that does not provide notice of a claim or defense adequate to permit the adversary a fair opportunity to respond or prepare the case. (b) Striking of Insufficient Bills of Particulars. — A bill of particulars that fails to inform the opposing party fairly of the true nature of the claim or defense may, on motion made promptly, be stricken and an amended bill of particulars ordered. If the amended bill of particulars fails to inform the opposite party fairly of the true nature of the claim or defense, the pleading not so amplified and the bills of particulars may be stricken. (c) Date for Filing Bill of Particulars. — An order requiring or permitting a bill of particulars or amended bill of particulars shall fix the time within which it must be filed. (d) Date for Responding to Amplified Pleading. — If the bill of particulars amplifies a complaint, a defendant shall respond to the amplified pleading within 21 days after the filing thereof, unless the defendant relies on pleadings already filed. If the bill of particulars amplifies any other pleading, any required response shall be filed within 21 days after the filing of the bill of particulars, or within such shorter or longer time as the court may prescribe.

Expanded Coverage of the New Rule. This new Rule is a significant enlargement upon former Rule 3:16 (which it replaces, and expands to equitable claims under revised Part Three in 2006. Another expansion under the new Rule is that it applies to all pleadings. In the former version, the bill of particulars mechanism was embedded in a sub-rule dealing with the pleading of negligence. The new rule is not limited to negligence cases. Finally, the new rule is not limited to complaints – it applies under Rule 3:7(a) to any "pleading." It seems apparent that the Rules drafters intended this to include the answer and any counterclaims, cross-claims or third-party claims, the major categories of aggressive pleadings in Virginia practice. Of course, from the standpoint of answering the complaint, it is also clear that pleas in bar and demurrers are responsive pleadings, and the amendment of a demurrer is a practice known to prior Virginia practice. Hence it is not impossible that the bill of particulars mechanism of Rule 3:7 will be deemed to apply to those filings as well. Moreover, Rule 3:18(a) defines all "motions" as included in the concept of pleadings. It will require case law or a Rule amendment to clarify whether there might be a situation under the new Rules of Court where a bill of particulars could be interposed with respect to an opaque or

- 463 - unduly-terse motion. In summary, the expanded coverage of the bill of particular device under Rule 3:7 is found in all three respects:

; it now applies to equity cases and not just those on legal claims.

; it is not limited to negligence cases, as the former rule implied.

; it applies to all "pleadings."

Promptness Required. Rule 3:7 requires that a motion to compel the plaintiff to lodge a bill of particulars must be made "promptly." No further timing provisions are contained in the new Rule. However, since one of the missions of this device is to protect defendants from having to respond to inscrutable allegations in a complaint, and it is deemed under the 2006 Rules of Court a "responsive pleading" that may be initially interposed in lieu of an answer under Rule 3:18, no doubt the expected timetable is that a defendant will file the motion before the answer is due (normally, 21 days after service of process). One self-enforcing reason for this is that a defendant who does not interpose the motion by that due date will be obliged to answer the ostensibly incomprehensible allegations before the particulars are provided. Thus most defendants will not need prodding to lodge the motion in the pre-answer period. Standard for granting. The new Rule spells out a standard gleaned from prior cases, and articulates it more fully than the former law-side rule did under the prior rule. Rule 3:7(a) guides the trial court in ruling on a motion for a bill of particulars to consider whether the existing complaint " does not provide notice of a claim or defense adequate to permit the adversary a fair opportunity to respond or prepare the case." This is a two-pronged, alternative standard: ; if the pleading is so cryptically worded that a defendant would be guessing and making inaccurate responses because of jumbled, incomplete, confusing or omitted elements in a claim, a bill of particulars will be warranted. ; in addition, if the defendant's preparation of the case after the answer will be impeded by a lack of specificity in the existing complaint, the new Rule provides that this is grounds for directing the plaintiff to supply a bill of particulars to provide the needed details. Time for Filing Bill of Particulars. The new Rule provides in subdivision (c) that any order requiring or permitting the preparation and filing of a bill of particulars or amended bill of particulars must fix the date by which it must be filed.

The Three-Strike Rule. New Rule 3:7 spells out the same number of "chances" a party, typically the plaintiff, has in Virginia as existed previously to set forth a viable complaint concerning the manner and detail of its presentation – a total of three. Under subdivision (b) of the Rule, once the trial court has ordered a bill of particulars the plaintiff has an obligation to make a good faith effort to spell out the allegations. If,

- 464 - however, the plaintiff's purported "amplification" of the allegations still leaves the claim uncertain or improperly spelled out, Rule 3:7(b), quoted above, provides that the bill of particulars itself may be stricken and an amended bill of particulars ordered by the trial court. The standard specified in the rule for striking a bill of particulars provided by a plaintiff focuses on whether the bill of particulars still "fails to inform the opposing party fairly of the true nature of the claim or defense may." The "fairly" standard appears to re-invoke the same two concerns noted above with respect to the feasibility of crafting an answer that is not trapped or skewed by the defects in the plaintiff's own pleading, and the possibility that an inadequate complaint will not allow the defendant to undertake proper discovery and trial preparations. The new Rule requires that a application to strike the first bill of particulars must be in the form of a "motion made promptly" after that bill of particulars is served. If the trial court agrees that the initial bill of particulars does not meet the standard of "inform[ing] the party fairly of the true nature of the claim or defense," the court may order the initial bill of particulars to be stricken and an amended bill of particulars to be filed. In the final stage contemplated as a possibility under new Rule 3:7, if the amended bill of particulars "fails to inform the opposite party fairly of the true nature of the claim or defense," no only will the amended bill of particulars be stricken, but the underlying pleading will likewise be stricken. Thus a party's "three strikes" under the bill of particulars procedures set forth in Rule 3:7 are: n filing the initial pleading without adequate detail to permit a fair response or required preparation with respect to the pleading, o filing a bill of particulars in response to a court order, which does not cure the inadequacy in the statement of the pleading's allegations, and p filing an amended bill of particulars which still fails to cure the defects. At that point the trial court has discretion under new Rule 3:7 to strike the party's pleading from the docket.

- 465 -

Responding to an Amplified Pleading

Despite the elaborate provisions of the rule for striking even inadequate bills of particulars, in most instances a single bill of particulars has sufficed in the past in Virginia, and it is expected that this will be the practice under the new Rule as well. Thus the final issue is date by which the adversary, typically the defendant who moved for more detail about the plaintiff's complaint, must now file the answer. Rule 3:7(d) provides that in those instances where there is no claim that the bill of particulars was insufficient in amplifying the allegations of the pleading, the responding party must respond to the amplified pleading within 21 days after the filing of the bill of particulars. The Rule carries forward language from the former provisions that no response is needed if the defendant "relies on pleadings already filed." This provision apparently contemplates use of the bill of particulars after a party has made one attempt to respond to a defective pleading. Because the new Rule reaches more than simply complaints, it has multiple response provisions. It provides that where the bill of particulars was used to spell out the averments of any pleading other than a complaint, "any required response shall be filed within 21 days after the filing of the bill of particulars, or within such shorter or longer time as the court may prescribe."

- 466 - I. Pleas in Bar or Special Pleas

Key Uses

These pleas, in essence affirmative defenses, may be included in the defendant's Answer (Rules 3:8), or filed in a separate pleading (e.g., "Plea in Bar", or "Special Plea of the Statute of Limitations"). Usually these pleas raise doctrines which, if shown applicable, will provide defendant complete shelter from one or more claims in the case. Affirmative defenses include:

♦ Statute of Limitations.

♦ Res Judicata.

♦ Collateral Estoppel.

♦ Statute of Frauds.

♦ Bankruptcy.

♦ Accord and Satisfaction.

♦ Contributory Negligence (Rule 3:18(c)).

♦ Usury (§ 6.1-330.56; Roanoke Mtg. Co. v. Henritze, 151 Va. 220, 144 S.E. 430 (1928)).

There are probably another twenty affirmative defenses seen from time to time. Study of the substantive law underlying the transaction will generally reveal the doctrines which are so treated (e.g., assumption of the risk in negligence).

- 467 - Pleas in Bar -- Taking Evidence? A defendant may lodge, prior to or in conjunction with a grounds of defense or answer, one or more pleas in bar. Typical grounds could include prior settlement, accord and satisfaction, lack of standing and the like. A defense of sovereign immunity may also be raised by plea in bar. When a plea is lodged, the trial court has discretion to hold an evidentiary hearing on the issues raised. If evidence is not taken, the court must treat the averments of the plaintiff's pleading as true for purposes of the disposition of the law suit, which may preclude entry of a dismissal based on the plea absent an evidentiary hearing. See Tomlin v. McKenzie, 251 Va. 478, 468 S.E.2d 882 (1996). Where evidence is taken, the fact finding is reviewed under normal standards. Thus, in a case where the circuit court, over plaintiff's objection, heard the evidence regarding a plea in bar and decided the issue rather than submitting it to the jury, the Court found no fault with the procedure. It held that when the trial court hears the evidence ore tenus, its findings are entitled to the weight accorded a jury verdict, and these findings should not be disturbed by an appellate court unless they are plainly wrong or without evidence to support them. Cooper Industries v. Melendez, 260 Va. 578, 590, 537 S.E.2d 580, 594 (2000). See Bottoms v. Bottoms, 249 Va. 410, 414, 457 S.E.2d 102, 104–105 (1995). In an interesting application of this principle, the trial court held a jury trial on numerous special pleas in Upper Occoquan Sewage Authority v. Blake Construction Co., Inc./Poole & Kent, 2003 Va. LEXIS 110 (2003), and used “special interrogatories” as a form of verdict, largely because the case involved several dozen contested claims.

Pleas of the Statute of Limitations Often referred to as a plea in bar or plea of the statute of limitations, the defense that a claim is barred by the applicable statute of limitations must – according to the statute below – be raised in a "responsive pleading," which means it can be shown as an affirmative defense in the answer or as a special plea (most common): § 8.01-235. Bar of expiration of limitation period raised only as affirmative defense in responsive pleading. The objection that an action is not commenced within the limitation period prescribed by law can only be raised as an affirmative defense specifically set forth in a responsive pleading. No statutory limitation period shall have jurisdictional effects and the defense that the statutory limitation period has expired cannot be set up by demurrer. This section shall apply to all limitation periods, without regard to whether or not the statute prescribing such limitation period shall create a new right.

"Pleas In Equity" Survive. As in cases in Chapter 3 suggest, a defendant may raise a special plea, setting forth a single issue of fact likely to be determinative of the parties' rights in the suit. A mere denial of plaintiff's averments in the complaint is not a special plea. See Bolling v. General Motors Acceptance Corporation, 204 Va. 4, 129 S.E.2d 54 (1963). And, as Stanardsville Volunteer Fire Company (also in the Chapter 3) indicates, where a "special plea in equity" is raised and disputed, either party may demand a jury trial. The jury's verdict in that instance is binding on the chancellor,

- 468 - unlike the effect of issues simply referred to an advisory jury by the court of in a trial of an equitable claim for which no jury trial right exists. See § 8.01-336 [set forth in Chapters 3 and 20 of these Readings].

Note on the Old Plea in Suspension Plea in Suspension. The plea in suspension, a rarely used device, survives in Virginia even after pleas in abatement were abolished. This application generally seeks to have the case stayed temporarily (placed on suspense) while some pending procedural anomaly is resolved. The older cases using this device suggest that the existence of another suit on the same cause of action would be grounds for the plea, as would incomplete bankruptcy proceedings or the failure to exhaust certain administrative remedies. No case has discussed this device in many decades.

J. Use of Affidavits and Unsworn Declarations

While there is no rule at the time of this writing expressly permitting use of affidavits on summary judgment, there are a variety of situations in modern Virginia litigation when affidavits are helpful and necessary. The General Assembly has enacted a provision modeled on the federal statute that has been effect for decades, allowing a party to make an unsworn ``declaration'' which is expressly subject to the penalties of perjury, which will have the same effect and be usable in the same circumstances as an affidavit in Virginia practice. Declaration Option Enacted. The Code provision, § 8.01-4.3 is entitled: "Unsworn declarations under penalty of perjury; penalty.'' It states that any matter in any judicial proceeding or administrative hearing which is "required or permitted to be established by a sworn written declaration, verification, certificate, statement, oath, or affidavit,'' may, "with like force and effect, be evidenced, by the unsworn written declaration, certificate, verification, or statement, which is subscribed by the maker as true under penalty of perjury." The declaration must be dated, in cast in "substantially the following form'': "I declare (or certify, verify or state) under penalty of perjury that the foregoing is true and correct.'' The Code provision expressly states that the declaration mechanism is not applicable to a deposition, an oath of office, or an oath required to be taken before a specified official other than a notary public.

- 469 -

K. Pleading to the Merits

In Chapter 11 these Materials collect the governing rules and case law doctrines relating to the "normal" response of filing a timely answer.

L. Verification of Pleadings.

Pleadings are normally not required to be sworn or supported by an affidavit of verification in Virginia. For some claims code provisions make it desirable to file an affidavit addressing certain circumstances. These topics include actions where a signature to an instrument is denied (Code § 8.01-279), where the existence of a corporation or partnership is denied, and those suits where a party denies the ownership, operation or control of property. A party may elect to file an affidavit in actions on a note or contract, since under § 8.01-28 accompanying the complaint with an affidavit of the amount due will be deemed admitted unless denied by the adversary under oath. Finally, where a plaintiff in an action in equity requests that the responsive pleadings be under oath this requirement will apply. See Rule 2:2. Some important Code sections concerning verification requirements are these:

§ 8.01-279. When Proof is Unnecessary unless Affidavit Filed; Handwriting; Ownership; Partnership or Incorporation. A. Except as otherwise provided by § 8.3-307, when any pleading alleges that any person made, endorsed, assigned, or accepted any writing, no proof of the handwriting shall be required, unless it be denied by an affidavit accompanying the plea putting it in issue. B. When any pleading alleges that any person, partnership, corporation, or unincorporated association at a stated time, owned, operated, or controlled any property or instrumentality, no proof of the fact alleged shall be required unless an affidavit be filed with the pleading putting it in issue, denying specifically and with particularity that such property or instrumentality was, at the time alleged, so owned, operated, or controlled. C. When parties sue or are sued as partners, and their names are set forth in the pleading, or when parties sue or are sued as a corporation, it shall not be necessary to prove the fact of the partnership or incorporation unless with the pleading which puts the matter in issue there be filed an affidavit denying such partnership or incorporation.

- 470 - § 8.3-307. Burden of establishing signatures, defenses and due course. (1) Unless specifically denied in the pleadings each signature on an instrument is admitted. When the effectiveness of a signature is put in issue (a) the burden of establishing it is on the party claiming under the signature; but (b) the signature is presumed to be genuine or authorized except where the action is to enforce the obligation of a purported signer who has died or become incompetent before proof is required. (2) When signatures are admitted or established, production of the instrument entitles a holder to recover on it unless the defendant establishes a defense. (3) After it is shown that a defense exists a person claiming the rights of a holder in due course has the burden of establishing that he or some person under whom he claims is in all respects a holder in due course.

§ 8.01-28. When judgment to be given in action upon contract or note unless defendant appears and denies claim under oath. In any action at law on a note or contract, express or implied, for the payment of money, or unlawful detainer pursuant to § 55-225 or § 55-248.31 for the payment of money or possession of the premises, or both, if (i) the plaintiff files with his motion for judgment or civil warrant an affidavit made by himself or his agent, stating therein to the best of the affiant's belief the amount of the plaintiff's claim, that such amount is justly due, and the time from which plaintiff claims interest, and (ii) a copy of the affidavit together with a copy of any account filed with the motion for judgment or warrant and, in actions pursuant to § 55-225 or § 55-248.31, proof of required notices is served on the defendant as provided in § 8.01-296 at the time a copy of the motion for judgment or warrant is so served, the plaintiff shall be entitled to a judgment on the affidavit and statement of account without further evidence unless the defendant either appears and pleads under oath or files with the court before the return date an affidavit or responsive pleading denying that the plaintiff is entitled to recover from the defendant on the claim. A denial by the defendant in general district court need not be in writing. The plaintiff or defendant shall, on motion, be granted a continuance whenever the defendant appears and pleads. If the defendant's pleading or affidavit admits that the plaintiff is entitled to recover from the defendant a sum certain less than that stated in the affidavit filed by the plaintiff, judgment may be taken by the plaintiff for the sum so admitted to be due, and the case will be tried as to the residue.

§ 16.1-88. Procedure when plaintiff sues on sworn claim. If a civil action in a general district court is upon a contract, express or implied, for the payment of money, or unlawful detainer pursuant to § 55-225 or § 55-248.31 for the payment of money or possession of the premises, or both, or is brought by the Commonwealth or any political subdivision or agency thereof for the collection of taxes or to enforce any other obligation for the payment of money, an affidavit and a copy of the account if there be one and, in actions pursuant to § 55-225 or § 55-248.31, proof of required notice

- 471 - may be made and served on the defendant in accordance with § 8.01-296 with the warrant or motion for judgment as provided in § 8.01-28 for actions at law, whereupon the provisions of § 8.01-28 shall be applicable to the further proceedings therein. The affidavit and the account if there is one and proof of appropriate notice may be attached to the warrant or motion, in which event the combined papers shall be served as a single paper.

- 472 - SHEETS v. RAGSDALE 220 Va. 322, 257 S.E.2d 858 (1979)

JUSTICE POFF delivered the opinion of the court. This appeal challenges a default judgment awarding liquidated damages for want of verification of the grounds of defense. The merits of the claim are not at issue. In the course of a contract action brought by an agency of the Commonwealth against George B. Ragsdale (hereinafter, plaintiff), plaintiff filed a third-party motion for judgment against James L. Sheets, Louise M. Sheets, Thomas M. Sheets, Doris M. Sheets, Paul R. Sheets, and Anna D. Sheets (hereinafter, defendants) alleging that defendants had assumed plaintiff's obligations under the contract. Plaintiff's motion, supported by affidavit verifying the statement of account attached, was served on defendants on September 25, 1975. Defendants' grounds of defense, filed October 9, 1975, was not verified or supported by affidavit. On the day of trial, January 28, 1976, plaintiff filed a motion for default judgment based on defendants' failure to verify their grounds of defense as provided in [a predecessor to § 8.01-28]. The trial judge took plaintiff's motion under advisement and, sitting without a jury, heard evidence on the merits of the claim. On February 3, 1976, one of the defendants, acting for himself and as agent for the others, filed an affidavit verifying their pleading. The trial judge found that the evidence showed that defendants were entitled to judgment on the merits. He ruled, however, that defendants were in default for noncompliance with the verification requirement and, by final order entered October 7, 1977, granted judgment for plaintiff. Citing Rule 1:10, defendants contend, as they did below, that plaintiff's failure to challenge the verification defect by motion to strike their pleading within seven days after it was filed constituted a waiver of the defect. In support of the trial court's holding that Rule 1:10 is "inconsistent with the obvious intent" of [the Code], plaintiff argues that the statute "sets forth the complete procedure and cannot be affected by Rule 1:10 without destroying the purpose of the statute." We disagree. The purpose of this statute, like that of its ancestors, is to expedite the adjudication of certain claims for the payment of money by preventing the delay that results from the dilatory assertion of sham defenses. Paris v. Brown, 143 Va. 896, 900, 129 S.E. 678, 679 (1925). That purpose is promoted by the requirement that the defense be solemnized by oath. Plainly, that requirement was imposed for the benefit of the plaintiff. The benefit the statute bestows is not, however, self-executing; it becomes available to the plaintiff only if he elects to claim it and does so in the manner the statute prescribes. Even then, the statutory benefit is not an indefeasible right. The verification requirement "may be waived by [the plaintiff] either expressly or by implication, or he may be his conduct be estopped to take advantage of it." Lewis v. Hicks, 96 Va. 91, 94, 30 S.E. 466, 467 (1898). Rule 1:10 expressly provides that the statutory benefit will be waived unless the plaintiff claims it timely. The need for such a limitation upon the verification requirement was explained by the Judicial Council in its January 1949 report entitled "Proposed Modifications of Practice and Procedure". Commenting at page 26 upon proposed Rule 14, one of the predecessors of Rule 1:10, the Council said:

- 473 - "Many statutes require pleadings to be sworn to or affidavits to be filed with pleadings.... The requirement of the oath is for the benefit of the plaintiff and can be waived by him. If he insists upon the oath, Rule 14 gives him what he is entitled to, namely the oath, and does not give him what he is not entitled to, namely judgment against the defendant solely because of the oversight of his lawyer." Reading [the predecessor of Code § 8.01-28] and Rule 1:10 together in light of their respective histories and prevailing case law, we find them fully compatible and complementary. There is nothing novel in the maxim that legal rights are subject to waiver and estoppel. The statute creates only an optional benefit; Rule 1:10 simply defines one mode of waiver. Because plaintiff failed to move to strike defendants' pleading for want of verification within seven days after it was filed, we hold that plaintiff waived the verification requirement and that the trial court erred in granting default judgment. The judgment will be reversed, and, since the trial court found that the evidence showed that defendants were entitled to judgment on the merits, final judgment will be entered here for defendants.

- 474 -

Note on Extensions of Time to Plead and Permissible Conditions on Extensions

Extension of Time to Plead -- Conditions. Rule 1:9 reads in pertinent part as follows: "The time allowed for filing pleadings may be extended by the court in its discretion and such extension may be granted although the time fixed already has expired. . . ." The Supreme Court has held that "Rule 1:9 gives the trial courts discretion, but it is a circumscribed discretion, not a broad discretion. It is the discretion to grant or deny an extension of time; that is the extent of it. We hold that the trial court had no authority to require [a party] to post a bond as a condition of being granted an extension of time in which to file pleadings." Lilienfield v. Baroff, 237 Va. 617, 378 S.E.2d 831 (1989)(a third-party defendant was served in July and failed to respond; after a motion for default lodged in September, the third-party filed a motion in October seeking leave to file responsive pleadings; adversary memoranda accused the third- party of engaging in schemes to defraud; the trial court conditioned grant of such leave to file a late answer upon a filing of a bond in the amount of $100,000).

- 475 - M. Amendment of Pleadings

Core Principles and Important Situations Amendment of pleadings in Virginia – among the most common activities in any litigation – requires leave of court. See Rule 1:8. In general this process has been liberally allowed, but extraordinary delay may motivate a court to exercise discretion to deny a late amendment request. See e.g. Griffin v. Rainer 212 Va. 627, 186 S.E.2d 10 (1972) (trial court's refusal was proper where amendment was offered at conclusion of evidence to alter the theory of recovery). Amendment serves the underlying policy of litigating the actual controversy between the parties, rather than the approximation of it that was initially pleaded. Amendment also permits a party to re-shape the pleadings after discovery and other factual and legal investigation. This process sharpens the issues, helps assure that all of the disputes between the parties can be tried at once, and can make management of the trial simpler. Also, amendment should be sought in light of the Virginia case law stressing the risks of variance between allegations and proof, and espousing the principle that a court lacks power to enter a judgment or decree upon facts not alleged or upon a right, however meritorious, that has not been pleaded and claimed.'' As the Supreme Court has summarized the matter: "Every litigant is entitled to be told in plain and explicit language the adversary's ground of complaint,'' a principle whose "purpose is to prevent surprise.'' Hensley v. Dreyer, 247 Va. 25, 30, 439 S.E.2d 372, 375–376 (1994). Basic Rule: Liberal Amendment on Permission. Rule 1:8 sets forth the basic rule provision concerning amendment of pleadings in Virginia civil cases. Unlike most other jurisdictions, there is no "amendment of right'' in Virginia once a pleading has been filed. That is, after filing, all amendments take place only if permitted through leave granted by the trial judge. This provision is less restrictive than it might first appear, because, like most other jurisdictions, Virginia adheres to the doctrine that leave to amend is to be "liberally granted in furtherance of the ends of justice.'' Thus, while amendment is committed to the "sound discretion'' of the trial judge, that discretion is most often exercised to allow amendment in the normal course. The comparable provision applicable in general district court is Rule 7A:9. Note, however, the important rule set forth in the first case below, that the defendant cannot confer permission to amend by responding to an amendment lodged without leave of court, and the Supreme Court has held that the trial court may lack subject matter jurisdiction to consider claims pled in an amendment filed without permission. A plaintiff has the duty to name the proper parties as defendants in a motion for judgment. Where the plaintiff fails to identify the proper corporate defendant, for example by naming instead a corporation controlled by the same individuals with a name similar to the trade name of the proper corporate defendant, amendment to cure the problem was appropriate. As noted elsewhere in these Readings, the Supreme Court has held that defendants and their counsel have no affirmative duty to inform the plaintiff or the trial court of error in naming proper parties, but where no defendant is misled by the error, amendment to name the correct persons or entities is permissible.

- 476 - Futility of Amendment. A trial court may properly deny a motion for leave to amend when it is apparent that such an amendment would accomplish nothing more than provide opportunity for reargument of questions already decided. See generally Ward's Equipment, Inc. v. New Holland N. Am., Inc., 254 Va. 379, 493 S.E.2d 516 (1997). Conditions. The trial court is authorized by Rule 1:8 to make provisions in directing an amendment to assure that notice of the revised pleading is timely provided to other parties. Where the pleading requires a response, the court will provide directions for a reasonable opportunity to do so. Other conditions may be attached to a ruling on a motion for leave to amend as well. Haymore v. Brizendine, 210 Va. 578, 172 S.E.2d 774 (1970). Failure to satisfy conditions imposed may limit or terminate a party's right to proceed. See Bibber v. McCreary, 194 Va. 394, 73 S.E.2d 382 (1952). The nature of possible conditions has not been directly addressed in the Virginia decisions, though analogous precedent suggests that any reasonable requirement will be upheld, though perhaps not a requirement to post a bond. Lilienfield v. Baroff, 237 Va. 617, 378 S.E.2d 831 (1989). Substantial compliance with the court's directions is required. See Pennsylvania-Little Creek Corp. v. Cobb, 215 Va. 44, 205 S.E.2d 661 (1974). Scope of Leave to Amend. A corollary of the rule that leave must always be obtained to make an amendment of a pleading in Virginia is the principle that where the trial court grants leave with a specific category or description of claims involved, the party has no freedom to make amendments that conflict with that instruction. Thus, in a case involving assault and defamation claims involving the pastor and other members of plaintiff's church, the court held that, in his amended motion for judgment, plaintiff also asserted assault claims against the pastor. However, the circuit court only gave plaintiff leave to amend his assault claims, which had been pled solely against the female congregation member who had been involved in the altercation occurring on the day of the church election. Plaintiff did not object to that determination. Thus the Supreme Court concluded that plaintiff's inclusion of assault claims against the pastor in his amended motion for judgment thus exceeded the scope of the circuit court's grant of leave to amend. Accordingly, his claims for assault against the pastor were not properly asserted and need not be addressed further. Bowie v. Murphy, 271 Va. 126, 624 S.E.2d 74 (2006). Inability to Cure Invalid Pleadings. In Virginia, cases filed by persons who are not proper parties are often deemed void. Often, amendment will not be available to cure the defect, and will not be a means to avoid a limitations defect in the case. Thus, in a case where the Court held that an administrator of a decedent's estate who is not licensed to practice law in Virginia may not file a wrongful death action pro se, and that any such filing is invalid and of no legal effect, and does not toll the applicable statute of limitations, the Court further rejected the possibility that amendment of the pleading could cure the problem. Plaintiff's argument that the circuit court should not have dismissed his wrongful death action but should have allowed his attorney to file an amended motion for judgment, or should have entered an order "relating counsel's name back to the date the initial pleading was filed,'' were also rejected. The Court held that an amendment to a pleading presupposes a valid instrument as its object. Here, plaintiff's initial motion for judgment was invalid and without legal effect because he signed the pleading in a representative capacity and was not authorized to practice law

- 477 - in this Commonwealth. Thus, in Bowie v. Murphy the Court found that in the absence of a valid motion for judgment, there were no pleadings before the court that could have been amended. Amendment to Cure Signature Defects? The Supreme Court also held that circuit court also lacked authority to grant plaintiff's request that his counsel's signature relate back to the date of the initial pleading. The provisions of Code §§ 8.01-6 through -6.2, which permit a circuit court to authorize amendments to pleadings to relate back to the date of an original pleading in a case, are seen as limited to instances in which a party seeks to correct a misnomer, add a party, or add a claim or defense. A defect in a signature to a pleading is not a defect that can be corrected pursuant to these statutes. Because plaintiff's initial pleading was invalid, there were no valid proceedings pending before the court. Therefore, the Supreme Court found it proper to dismiss plaintiff's complaint. See Kone v. Wilson, 272 Va. 59, 630 S.E.2d 744 (2006). Timing Considerations. Early amendment is almost always preferable to an application late in the preparations. Timely revision permits trial preparations, particularly any discovery procedures undertaken, to deal with the ultimate allegations and defenses. Amendment late in the proceedings has been permitted. Thus, in the classic case of Rosenberg v. Rosenberg, 210 Va. 44, 168 S.E.2d 251 (1969), the Supreme Court found it an abuse of the trial court's discretion not to permit an amended bill of complaint where the plaintiff filed suit, participated in over a year of litigation, including an evidentiary hearing before a commissioner in chancery that led to the filing of factual findings on the contentions of the parties, and then made an oral motion for leave to amend at the time the commissioner's report was before the court for a hearing on exceptions. When is the Amendment "Effective"? Rule 1:8 provides that no amendments shall be made to any pleading after it is filed save by leave of court. In an unfortunate case, Ahari v. Morrison, 275 Va. 92, 654 S.E.2d 891 (2008), it became apparent that one important result of this doctrine is that tendering the pleading to the court, and making a motion for leave to amend, has no limitations effect: only approval of filing by the court triggers the effectiveness of the amended pleading. Prior case law had held that an amended pleading was without legal efficacy where plaintiff failed to obtain leave of court to amend the original pleading. This rationale was found controlling -- Until the date on which the circuit court grants plaintiff's motion for leave to amend, the amended complaint had no legal efficacy. Only at that time was the amended complaint deemed filed, thereby adding the new party defendants and commencing the action as to them. Thus, until the circuit court granted leave for a plaintiff to amend her complaint, the statute of limitations continued to run with regard to the cause of action asserted against the new defendants. On the operative filing date of the amended complaint the statute of limitations had expired by more than two months. The circuit court therefore did not err by granting the defendants’ plea of the statute of limitations. Subject Matter of Amendments and "Relation Back.'' Prior to the current Code, traditional Virginia doctrine was that when an amended pleading asserts a new cause of action or makes a new demand, the statute of limitations continues to run until the date of the amendment. In Vines v. Branch, the Supreme Court gave thorough exploration of the considerations applicable to amendments which arguably change legal theories or

- 478 - add theories to claims previously pled – also prior to the enactment of current Code provisions. While the opinion does not highlight the distinction, the two issues of interest in these circumstances are: (1) whether the amendment raising new theories is proper as a matter of joinder of claims; and (2) whether there is any statute of limitations significance to the assertion of the added theory in an amended pleading as opposed to the filing of a new action. It should be a rare case where the amendment is barred for addition of legal theories. In the landmark decision in Fox v. Deese, in which an amended pleading had been filed asserting a new mix of claims, the Supreme Court made it clear that multiple, inconsistent causes of action, against differing combinations of defendants, with varying scienters and other differences, were properly maintainable in a single suit. See the full discussion of Fox v. Deese.. In this light, the language in Vines, suggesting that amendment is generally inappropriate if differing claims would be asserted thereby, which appears to be based on oblique references in decisions rendered early in this century, should be read as limited to the context where the amendment would have statute of limitations consequences. However, whether the amendment has statute of limitations significance is a more difficult question. For some purposes, in Virginia the filing of an amended pleading may "relate back'' to the filing of a prior pleading, so that — for limitations purposes — it is deemed to have been filed when the prior paper was filed. This is true under Code § 8.01-6 when an amendment seeks to name a new defendant after a mistake in identifying the correct party, where the underlying cause of action remains the same, and the new party had notice that it was probably the intended defendant. A key requirement of this Code section is that the transaction or occurrence giving rise to the claim against the new party is the same "event'' which the original pleading sought to litigate. Similarly, counterclaims and cross-claims relating to the same transaction or occurrence which a plaintiff sues upon are deemed to relate back to the time plaintiff's motion for judgment was filed. However, for garden variety amendments, simply revising the claims a plaintiff has made in an earlier pleading against a defendant, the "transaction or occurrence'' approach was not recognized as a basis for considering the revised claim timely until 1996. When a revised claim would be timely if begun as a separate suit at the time of amendment, no limitation problem arises. However, if the claim to be asserted in the amendment would be barred if first made in a new lawsuit at the date of the amendment, it will be timely only if it is "deemed'' to have been filed at the earlier date when the prior pleading was lodged. Prior to 1996, the trial court was required in such circumstances to consider whether the legal elements of the new claim were identical to those of the former claim, whether the evidence that would address the claim was the same as would be utilized to establish the former claim, and whether the forms and measures of relief were the same in the added or revised claim as they would have been under the prior pleading. In an enactment thus far inadequately considered by the bench and bar in Virginia, in 1996, the General Assembly fundamentally altered the Virginia approach to the relation back of amended pleadings. Under the provisions of a Code § 8.01-6.1, an amended pleading — changing or adding a claim or defense — relates back to the date of the original pleading for purposes of the statute of limitations if the amended averments pertain to the same "conduct, transaction or occurrence'' set forth in the

- 479 - original pleading, so long as the pleader was "reasonably diligent'' in asserting the amendment and so long as the adverse parties are not "substantially prejudiced'' in litigating the case on the merits owing to the timing of the amendment. The "conduct, transaction or occurrence'' test is a familiar one, used in many jurisdictions, and applicable in Virginia to counterclaims and cross-claims. This test also governs the relation back status of claims asserted against new defendants. The obvious purpose of the "reasonable diligence'' test is to assure that a party does not wait an inordinate amount of time after becoming aware of the need for change or correction in a claim or defense. Similarly, the "substantial prejudice'' test is calculated to cause trial courts to consider whether an adversary party has lost access to evidence during the amending party's delay, such that the adversary can no longer fairly present contrary evidence. Usually, supplemental discovery, or a continuance for further preparations, will suffice to protect the adversary from the effects of an amendment changing a claim or defense. Proffer of the Proposed Pleading. The Supreme Court has declined to find error in the decision of a trial court denying leave for further amendment of a motion for judgment where the plaintiff failed to tender a draft of the further amended pleading in the trial court. Dade v. Anderson, 247 Va. 3, 8, 439 S.E.2d 353, 356 (1993). Since the abuse of discretion standard applies to such rulings, the absence of a record of the proposed pleading was fatal to the attempt to have the denial of leave reviewed. This consideration, combined with the fact that proffer of an already-drafted amended pleading may persuade the trial court initially to grant leave since the work of crafting the revised pleading has been completed, and the scope of its averments is open for inspection, suggests that counsel should make a proffer of a proposed amended pleading whenever possible. Supplemental Pleadings. In Rosenberg, the Supreme Court explained the role of "supplemental pleadings'' as an alternative to amended pleadings. It noted that "[g]enerally, an amended bill states a fact which was in existence at the time the original bill was filed, whereas a supplemental bill states a fact which came into existence after the original bill was filed.'' Quoting from earlier authority, the court stated: One of the chief offices of a supplemental bill is to bring into the case new events referring to, and supporting, or affecting rights and interests already mentioned, which have arisen subsequently to the filing of the original bill. A supplemental pleading will not be permitted if the purpose is to introduce a completely new case. However, the interpretation of what is a new claim appears to be structured to validate the resolution of the parties' claims, rather than to impose a rigid definition of the cause of action as originally pleaded. In Rosenberg, an averment of adultery taking place after the original divorce proceeding was filed (on a different theory) was permitted, on the rationale that the ultimate relief was the same under the new theory and the conduct was pertinent to other issues already before the court. Amendments of the Ad Damnum Clause. Amendment of a plaintiff's ad damnum clause have special poignancy in Virginia, since the amount pled serves as a ceiling for any possible recovery if plaintiff prevails. Amendments, most often to increase the ad damnum, are therefore not uncommon. As in other situations, the decision to permit amendments of pleadings rests within the sound discretion of the circuit court. The Supreme Court has held that when deciding whether to grant a motion to amend a

- 480 - motion for judgment to increase an ad damnum clause, a circuit court must consider whether the defendant will be prejudiced and whether such prejudice will affect the defendant's ability to have a fair trial. The circuit court must also consider the plaintiff's right to be compensated fully for any damages caused by the defendant's acts or omissions. Peterson v. Castano, 260 Va. 299, 303, 534 S.E.2d 736, 738 (2000). See generally Whitaker V. Heinrich Schepers Gmbh & Co. KG, 276 Va. 333,661 S.E.2d 828 (2008). On appeal, review of decisions to grant or deny a motion to amend to increase the ad damnum clause is limited to whether the trial court abused its discretion. In Peterson, where the record revealed that plaintiff made motions to amend the motions for judgment to increase each ad damnum clause on four different occasions over a seven month period, the Court held that the trial judge abused his discretion in denying the motion to amend. Particularly telling was a failure to grant leave to amend in response made on the initially scheduled trial date, when the case was adjourned for several months (hence prejudice to the defendant from the late amendment was abated by the re-scheduling of trial in any event). Sometimes late amendments necessitate adjournments of their own. And there is a tendency of judges to look unfavorably on eve-of-trial amendments if the defendant can articulate any reasonable basis to think that there will be prejudice from the increase in the amount sought. However, the Supreme Court cautioned in Peterson that "a litigant's right to a fair trial must not be made subordinate to the judiciary's efforts to control its docket.'' Trial Amendments. Amendment at trial may be granted to conform to the proof, but post-verdict amendment to increase the ad damnum clause in the motion for judgment will not be permitted under Powell v. Sears, Roebuck & Co., 231 Va. 464, 344 S.E.2d 916 (1986), excerpted earlier in these Materials.

- 481 - Failure to Obtain Leave to Amend

MECHTENSIMER v. WILSON 246 Va. 121, 431 S.E.2d 301 (1993)

JUSTICE HASSELL delivered the opinion of the Court. In this appeal, we consider whether the trial court had jurisdiction to adjudicate an action in which the defendant filed responsive pleadings to an amended motion for judgment even though the plaintiff failed to obtain leave of court before filing the amended pleading. On June 21, 1990, Dr. Earl C. Mechtensimer filed a motion for judgment against Wesley Wilson and others, alleging that they had committed certain tortious acts against him arising out of an employment relationship. This motion for judgment was not served on Wilson. Mechtensimer filed an amended motion for judgment on May 31, 1991, without seeking leave of court as required by Rule 1:8. The amended motion was served on Wilson by posting. Wilson filed a grounds of defense and a motion for a bill of particulars in response to the amended motion. Subsequently, Wilson learned that the amended motion had been filed without leave of court and moved to quash service and dismiss the action on the ground that the court lacked jurisdiction because Mechtensimer failed to comply with Rule 1:8. The trial court granted Wilson's motion to dismiss, and we awarded Mechtensimer an appeal. Mechtensimer argues that the trial court erred by dismissing the action because, even though leave of court was not obtained before filing the amended motion, Wilson had made a general appearance by filing his grounds of defense and motion for a bill of particulars. Wilson, however, argues that even though he filed responsive pleadings, the amended motion had no legal efficacy because it was filed without leave of court. Rule 1:8 states: No amendments shall be made to any pleading after it is filed save by leave of court. Leave to amend shall be liberally granted in furtherance of the ends of justice. In granting leave to amend the court may make such provision for notice thereof and opportunity to make response as the court may deem reasonable and proper. Applying the plain language of this rule, we hold that Mechtensimer's amended motion was without legal efficacy because he failed to obtain leave of court to amend his original motion for judgment. Thus, the court did not acquire jurisdiction to adjudicate any causes of action alleged in the amended motion. We find no merit in Mechtensimer's argument that Wilson waived any defects in process and service by filing responsive pleadings. It is true that we have followed the well-established rule that a defendant waives defects in process and service thereof by appearing in an action. See Davis Bakery v. Dozier, 139 Va. 628, 633, 124 S.E. 411, 412 (1924); Atlantic & Danville R.R. Co. v. Peake, 87 Va. 130, 140, 12 S.E. 348, 350

- 482 - (1890). That principle, however, is not applicable here. Wilson does not challenge defects in the process or service thereof. Rather, Wilson challenges the jurisdiction of the trial court to adjudicate claims asserted in an amended motion for judgment filed without leave of court in violation of Rule 1:8. Wilson's pleadings responding to that motion cannot confer jurisdiction upon the trial court. We will affirm the judgment of the trial court.

Failure to Grant Leave to Amend

MORTARINO v. CONSULTANT ENGINEERING SERVICES 251 Va. 289, 467 S.E.2d 778 (1996)

JUSTICE HASSELL delivered the opinion of the Court. . . . . Next, Mortarino asserts that the trial court abused its discretion by denying his motion for leave to amend the motion for judgment. The defendants do not respond to this assignment of error in their respective briefs. Rule 1:8 states in part: "leave to amend shall be liberally granted in furtherance of the ends of justice." Whether to grant leave to amend "is a matter resting within the sound discretion of the trial court." Kole v. City of Chesapeake, 247 Va. 51, 57, 439 S.E.2d 405, 409 (1994). Here, nothing in the record suggests that the defendants would have been prejudiced by allowing an amended motion for judgment. Additionally, Mortarino had not previously amended his motion for judgment. We conclude, therefore, that the trial court abused its discretion in failing to allow the filing of the amended motion for judgment.

- 483 -

Note: Changing the Named Defendant Amendments adding or clarifying the identity of defendants named in the original pleading are also affected by the 1990 and 1996 amendment to Code § 8.01-6, which were clearly intended to reach beyond the “misnomer” doctrine so as to authorize substitution of new defendants if the standards of the section are met. However, no reported case has used the section for this effect to date. § 8.01-6 Amending Pleading to Correct Misnomer; Relation Back to Original Pleading. A misnomer in any pleading may, on the motion of any party, and on affidavit of the right name, be amended by inserting the right name. An amendment changing the party against whom a claim is asserted, whether to correct a misnomer or otherwise, relates back to the date of the original pleading if (i) the claim asserted in the amended pleading arose out of the conduct, transaction, or occurrence set forth in the original pleading, (ii) within the limitations period prescribed for commencing the action against the party to be brought in by the amendment, that party or its agent received notice of the institution of the action, (iii) that party will not be prejudiced in maintaining a defense on the merits, and (iv) that party knew or should have known that but for a mistake concerning the identity of the proper party, the action would have been brought against that party.

§ 8.01-6.1. Amendment of pleading changing or adding a claim or defense; relation back Subject to any other applicable provisions of law, an amendment of a pleading changing or adding a claim or defense against a party relates back to the date of the original pleadings for purposes of the statute of limitations if the court finds (i) the claim or defense asserted in the amended pleading arose out of the conduct, transaction or occurrence set forth in the original pleading, (ii) the amending party was reasonably diligent in asserting the amended claim or defense, and (iii) parties opposing the amendment will not be substantially prejudiced in litigating on the merits as a result of the timing of the amendment. In connection with such an amendment, the trial court may grant a continuance or other relief to protect the parties. This section shall not apply to eminent domain or mechanics' lien claims or defenses.

- 484 -

Notes – "Relation Back"

Amendments which change theories sufficiently to sound in another area of the law or which change the identify of a defendant (or other party) against whom a claim for relief is asserted, may have other problems. The principal concern is the statute of limitations for actions at law, or equitable actions with legal analogues. See generally Chapter 16, LIMITATION OF ACTIONS. The Court held in Neff v. Garrard, 216 Va. 496, 219 S.E.2d 878 (1975), that an amendment setting up a different cause of action will not "relate back" to the date of the original filing and hence is only viable if at the time of the amendment itself the statute has not run. For personal injury actions this rarely will present a surprise, since the Virginia statute fixes the same period for all claims founded on injuries to the person regardless of the label affixed in the charging pleading (a 2 year period applies; see Chapter 16, infra.) When the cause of action shifts between two theories other than in the personal injury context, however, the relation back hurdle may intercede forcefully. However, in 1996 the General Assembly enacted Code § 8.01-6.1. The section, proposed and drafted by Professor Sinclair (except for the last sentence, added by the Legislature), adopts for Virginia a transaction or occurrence concept for relation back of claims. It has yet to be construed. How and to what extent it will alter the outcomes in Neff or other case law remains to be seen. In two classic cases, Vines v. Branch, 244 Va. 185, 418 S.E.2d 890 (1992), and Carter v. Williams, 246 Va. 53; 431 S.E.2d 297 (1993), the Supreme Court of Virginia –prior to the enactment of Code §8.01-6.1 – reviewed amendment applications by studying the allegations to determine whether the "same claim" was made in the amendment. And in Vines the Court said: "The general rule in this Commonwealth is that amendments will be permitted where they seek determination of the same subject matter of the controversy originally pleaded. Amendments will not be allowed, however, when they raise a new substantive cause of action which is different from that which the plaintiff asserted when he or she first filed the action. New River Min. Co. v. Painter, 100 Va. 507, 510, 42 S.E. 300, 301 (1902). Here are some pretty important questions in light of the statutes set forth above: n isn't it crystal clear that – if the statute of limitations has not run, one should be allowed to amend to add any claim, related or not. The trial court could decide that the new claim is too confusingly different, and order a separate trial, but is there anything in Virginia pleading, today, which would bar adding an unrelated claim? o if the conduct, transaction or occurrence upon which a newly added claim is based was also pled originally, what is the effect on the statute of limitations analysis for the later claim? And if the newly added claim is based on a different transaction? p does it make any difference in answering Question o what legal theory was pled originally, or what evidence would be used to prove that original claim, or what relief was sought in the first claim? In 1996 the General Assembly sought to fundamentally alter the Virginia approach to the relation back of amended pleadings. Under the provisions of a new Code §8.01- 6.1, set forth at the outset of this section, an amended pleading -- changing or adding a

- 485 - claim or defense -- relates back to the date of the original pleading for purposes of the statute of limitations if the amended averments pertain to the same "conduct, transaction or occurrence" set forth in the original pleading, so long as the pleader was "reasonably diligent" in asserting the amendment and so long as the adverse parties are not "substantially prejudiced" in litigating the case on the merits owing to the timing of the amendment. Code § 8.01-6.1. The "conduct, transaction or occurrence" test is a familiar one, used in many jurisdictions, and applicable in Virginia to counterclaims and cross-claims. This test also governs the relation back status of claims asserted against new defendants. See Code § 8.01-6. The obvious purpose of the "reasonable diligence" test is to assure that a party does not wait an inordinate amount of time after becoming aware of the need for change or correction in a claim or defense. Similarly, the "substantial prejudice" test is calculated to cause trial courts to consider whether an adversary party has lost access to evidence during the amending party's delay, such that the adversary can no longer fairly present contrary evidence. Usually, supplemental discovery, or a continuance for further preparations, will suffice to protect the adversary from the effects of an amendment changing a claim or defense. Misnomer. No doubt the "classic" Virginia "misnomer case is Jacobson v. Southern Biscuit Co., 198 Va. 813, 97 S.E.2d 1 (1957), where a suit was commenced against "Southern Biscuit Company, Incorporated, a Virginia corporation, Terminal Place, Richmond, Virginia." and served upon A. B. Childress, "Asst. Sectry. Southern Biscuit Co., Inc." On December 15, 1955, two days later, the court entered an order allowing the plaintiffs' motion for judgment to be amended "To correct as follows the name and address of the defendant" to "Weston Biscuit Company, Inc., a Delaware corporation, doing business in the State of Virginia under the name of Southern Biscuit Company, whose statutory agent is the Secretary of the Commonwealth of Virginia;" and the amended motion was ordered to be served on the proper authorities. The motion for judgment as so amended, and otherwise in the identical language and with the identical exhibit as the original motion, was duly filed and duly executed on the statutory agent on December 15, 1955. On January 3, 1956, "Weston Biscuit Company, Inc., a Delaware Corporation, doing business in the State of Virginia under the name Southern Biscuit Company, By Fielding L. Williams Of Counsel" filed its motion to strike out the amended motion for judgment and to quash the process issued thereon on the ground that the amended motion "was in fact the institution of a new action," and the substitution of one sole defendant for another sole defendant, "the only change * * * being the defendant's name." The Court said: If the right party is before the court although under a wrong name, an amendment to cure a misnomer will be allowed, notwithstanding the running of the statute of limitations, provided there is no change in the cause of action originally stated. . . The amendment . . . worked no change in the cause of action sued on, the party which it substituted bore a real relation of interest to the original party and to the suit, and nobody was misled or prejudiced by the mistake. It was proper, we think, to allow the amendment. . .

Would the 1990 and 1996 amendments to Code § 8.01-6, resulting in the version of the Code provision set forth at the outset of the present section of these materials,

- 486 - obviate the analysis undertaken in Jacobson? This decision is still regularly cited in trial court proceedings, since the outcome seems fair. Under the current version of Code § 8.01-6 is a different approach required?

Knowing Concealment of Plaintiff's Mistake. Some of the chestnut problems of every state's jurisprudence involve situations where the wrong defendant is sued, recognizes this fact, but waits until the statute of limitations has run before notifying plaintiff of his error. It becomes poignant when the defendant who is sued has some relationship to the correct defendant. Among the key Virginia decisions on this problem is Lake v. Northern Virginia Women's Medical Center, 253 Va. 255, 483 S.E.2d 220 (1997) in which certain individuals operated a clinic where plaintiff received care as well as a separate clinic she sued by mistake. The Supreme Court said: It is axiomatic that a plaintiff has the duty to name the proper parties as defendants in the motion for judgment. As we said in Baldwin v. Norton Hotel, Inc. 163 Va. 76, 80, 175 S.E. 751, 752 (1934): It is necessary, in the orderly administration of justice, that the identification of parties to a cause be certain. Hence one of the rules of good pleading requires that the correct name of the parties litigant be used in the pleadings. . . . These matters are elemental, and a mere restatement of them discloses the necessity for definiteness and accuracy in naming the defendant. In the present case, the plaintiff clearly failed to identify the proper corporate defendant, naming instead a corporation controlled by the same individuals and with a name similar to the trade name of the proper corporate defendant. Barondess admitted to the trial court that he and the defendants were aware of the plaintiff's error from "the very beginning." While the defendants and their counsel had no affirmative duty to inform the plaintiff or the trial court of the plaintiff's error or to disclose voluntarily the identity of the proper corporate defendant, they were subject to the requirement that pleadings or other papers signed and submitted to the court must be "well grounded in fact . . . and . . . not interposed for any improper purpose." Code § 8.01-271.1; see also Rule 1:4(a) and (d). Accordingly, when responding to the factual allegations of a pleading or discovery request, a party is not free to assign differing definitions to identical terms from one response to the next in order to confuse or obscure the true facts, and, thus to mislead the opposing party. The defendants and their counsel were therefore required to respond to the initial motion for judgment, participate in discovery, and otherwise conduct themselves before the trial court in a manner consistent with their knowledge that the Medical Center was not the proper corporate defendant. The record of this case discloses that this was not done. Rather, beginning with the initial response to the 1992 motion for judgment and continuing up to filing of the motion to dismiss, every action of the defendants and their counsel was calculated to give the impression that the Medical Center was, and admitted to being, the owner of the clinic where Lake received her abortion. Certainly, there is no room for debate that the defendants' admission that Lake

- 487 - received an abortion in Fairfax on April 13, 1991, at the Medical Center was not "a completely accurate statement" as asserted by Barondess, because she could not have had more than one abortion on the same day and at two different clinics. Even granting that some other representations were potentially made through "mistake" and "inadvertent oversight," the resulting effect of misrepresenting the identity of the Medical Center as the proper corporate defendant understandably misled the plaintiff. Thus, while the error in naming the incorrect corporate defendant was Lake's, the failure to discover this error in a timely manner was occasioned by acts of the defendants, either deliberate or careless, which would lead any reasonable plaintiff to infer that the Medical Center was a proper party to the suit. Where an error has been made in a pleading with respect to the identification of parties, that fact alone will not defeat the action. Code § 8.01- 5. Rather, the trial court may permit the error to be cured through an amendment of the pleading to substitute the proper party. Id. As with any amendment to a pleading, whether a substitution of a party should be permitted is a matter committed to the sound discretion of the trial court. Rule 1:8. Nonetheless, we have further recognized that, under Rule 1:8, amendment of pleadings should be liberally granted if doing so will further the ends of justice. Fox v. Deese, 234 Va. 412, 429, 362 S.E.2d 699, 709 (1987). Amendment of a pleading to substitute a party is especially appropriate "'where the substituted party bears some relation of interest to the original party and to the suit, and there is no change in the cause of action . . . .'" Jacobson v. Southern Biscuit Co., 198 Va. 813, 817, 97 S.E.2d 1, 4 (1957). "'[The] discretionary power of the court to such end is to be liberally exerted in favor of, rather than against, the disposition of a case upon its merits.'" Id. . . . . Here, as in Jacobson, the principals of the proper corporate defendant have been parties to the suit from the beginning, and substitution of the proper corporate defendant would not alter the nature of the cause of action. The rationale of Jacobson holds true here, especially in consideration of the acts of the defendants which misled Lake as to the identity of the corporate defendant. Accordingly, Lake should have been permitted to substitute Fairfax Square for the Medical Center so that the case might proceed, after a reasonable continuance, to a disposition on its merits. For these reasons, we hold that the trial court erred in not permitting Lake to amend her motion for judgment.

- 488 -

Hypothetical

C, a contractor, brings a timely action (i.e., within the statutory six months) under the mechanics' lien laws arising out of work done on P's property. C sues P. After several years of bitterly contested litigation it is pointed out to C that L (the lender under a deed of trust on the property) and T (the trustee under the deed of trust) are necessary parties to the suit. C seeks leave of court to file an amended pleading naming L and T as additional defendants. These prospective defendants plead bar by the statute of limitations. What result under Code §§ 8.01-6 and 8.01-6.1?

- 489 - N. Notice of Submission of Draft Orders.

Virginia requires – by rule and ancient practice traditions – that a draft order be circulated (ordinarily by the winning party) and then submitted to the court for its approval. As the case which follows these two rules illustrates, this procedure (which grew at a time when judges had no clerical support and everything was handwritten) can cause problems.

Rule 1:12. Copies of Pleadings and Requests for Subpoenas Duces Tecum to be Furnished. All pleadings, motions and other papers not required to be served otherwise and requests for subpoenas duces tecum shall be served by delivering, dispatching by commercial delivery service, transmitting by facsimile, delivering by electronic mail when consented to in writing signed by the person to be served, or mailing, a copy to each counsel of record on or before the day of filing. Service pursuant to this Rule shall be effective upon such delivery, dispatch, transmission or mailing, except that papers served by facsimile transmission completed after 5:00 p.m. shall be deemed served on the next day that is not a Saturday, Sunday, or legal holiday. Service by electronic mail under this Rule is not effective if the party making service learns that the attempted service did not reach the person to be served. At the foot of such pleadings and requests shall be appended either acceptance of service or a certificate of counsel that copies were served as this Rule requires, showing the date of delivery and method of service, dispatching, transmitting, or mailing. When service is made by electronic mail, a certificate of counsel that the document was served by electronic mail shall be served by mail or transmitted by facsimile to each counsel of record on or before the day of service.

Rule 1:13. Endorsements. Drafts of orders and decrees shall be endorsed by counsel of record, or reasonable notice of the time and place of presenting such drafts together with copies thereof shall be served pursuant to Rule 1:12 upon all counsel of record who have not endorsed them. Compliance with this Rule and with Rule 1:12 may be modified or dispensed with by the court in its discretion.

- 490 - Basic Operation of the Requirement

ROSILLO v. WINTERS 235 Va. 268, 367 S.E.2d 717 (1988)

JUSTICE COMPTON delivered the opinion of the Court. [The facts of this case involved a troubled corporation for which a receiver was appointed. The receiver ran the company for years before this appeal] The second contention made by defendant is that orders essential to the regularity of the proceeding were entered without notice to him and are void. He focuses on the order of August 18, 1983, which appointed a receiver to take charge of partnership assets, and the final decree of January 3, 1985. As will become obvious, we need address only the former order. . . The August order was endorsed by counsel of record for the plaintiffs but not by counsel of record for the defendant. Although the order recites that the plaintiffs and the defendant "came" by counsel, the record discloses that the notice required by Rule 1:13 was not given nor was any evidentiary hearing held on the issues underlying the findings contained in the order before that order was entered. The record does show, however, that following hearings in June and July of 1983, at which the demurrer was argued, counsel for plaintiffs mailed to counsel for defendant a draft of an order mentioning that argument on the demurrer was taken under advisement and providing for appointment of a receiver. The record also shows that counsel for defendant submitted a revised order to plaintiffs' counsel, who found it "totally unacceptable." Subsequently, and after the attorneys could not reach agreement on the form of the order, the plaintiffs' draft was forwarded to the court and entered by Judge Humphries on August 18. The record contains two accounts of how the draft order reached Judge Humphries for entry. According to one version, plaintiffs' counsel, "after waiting and waiting for the Order" to be returned to him by defendant's counsel, "called" Judge D. W. Murphey, another judge of the trial court, and asked for a hearing. Judge Murphey had entered a routine order in the case and heard argument on the demurrer. According to counsel, Judge Murphey "said he had had enough hearings and did not need any more, to send him the Order without Mr. Pascal's [trial counsel for defendant] signature. So, I sent the order." According to the other version, counsel for the plaintiffs "ran into" Judge Murphey in a courthouse corridor and "discussed the case" during which the judge asked "when we were going to get the order." Counsel responded that he could not "get Mr. Pascal to sign it" and the judge asked that the order be submitted for entry without Pascal's endorsement. Plaintiffs' draft was then mailed to the court "with a copy sent to Mr. Pascal." Under either version, the draft order should not have been entered. The endorsement of defendant's counsel should have been obtained or counsel should have been furnished with reasonable notice of the time and place of presenting the draft for entry. Rule 1:13; Cofer v. Cofer, 205 Va. 834, 836, 140 S.E.2d 663, 665 (1965). The fact that the attorneys were at odds on the form of the order made the requirement of notice and an opportunity for a hearing all the more important in this case.

- 491 - And, if the court entered the order intending to dispense with the requirements of the Rule, the court abused its discretion. Iliff v. Richards, 221 Va. 644, 649, 272 S.E.2d 645, 648 (1980); Cofer, 205 Va. at 837, 140 S.E.2d at 665. The order provided not only for appointment of a receiver and fixed the receiver's bond, but it also recited significant findings. For example, referring to the allegations of the bill of complaint, the court determined "that the partnership is in such financial condition that it should be dissolved as soon as possible." The court also determined "that it is necessary and proper that a receiver be appointed to take charge of the partnership business in order to preserve the assets and protect the interest of all parties concerned." The order further directed the receiver to assume full and complete control of the business and "to wind up the business of the partnership as soon as possible." Substantial rights of the defendant were affected by the action of the court embodied in the order and the court should not have dispensed with notice and an opportunity for the defendant to be heard. Consequently, we hold that the order of August 18, 1983 was void, thus nullifying all subsequent proceedings in the suit. The final decree will be reversed and the suit will be remanded to the trial court. The suit shall proceed on the bill of complaint after the trial court enters an order overruling the demurrer.

- 492 - COFER v. COFER 205 Va. 834, 140 S.E.2d 663 (1965)

JUSTICE EGGLESTON delivered the opinion of the court. By a decree entered on March 27, 1959, the appellant wife was granted a divorce a vinculo from her husband, Hardy Dashiells Cofer, and awarded the custody of their three infant children. The decree directed the husband to pay the wife the sum of $300 per month, of which $100 was for her maintenance and support and $200 for the maintenance and support of the three children. . . . On July 15, 1963, after proper notice to the appellant wife, the husband filed a petition asking for a modification of the terms of the order last mentioned, because, he said, the wife had moved with the children from Virginia to Pennsylvania, making more expensive his visitation with the children; that he had remarried; that his former income had been reduced; and that he and his former wife had entered into an agreement whereby the support money for the children was to be reduced. He further asked to be relieved of the obligation to pay the sum of $1,325, being the amount in which he was in arrears for the support money of the children under the terms of the former order. On the same day on which the petition was filed a consent order was entered, reinstating the cause on the docket, permitting the husband to file his petition, and granting the wife "ten (10) days from July 12, 1963, to answer said petition if she be so advised." She failed to answer this petition. On September 4, 1963, the lower court entered an order granting the prayer of the husband's petition. . . We agree with the first contention of the appellant wife that the order of September 4 was void and should have been vacated on her motion, because it was entered without the required endorsement of counsel and without previous notice to him of its presentation for entry. See [Rule 1:13]. It is true that [the rules] vest the trial court with discretion to modify or dispense with compliance with the requirements of [Rule 1:13 and 1:12]. The language of the order of September 4 indicates that the requirements [of endorsement or notice to counsel] were dispensed with because the wife had "failed to answer the petition" of the husband within the ten days allotted therefor. We do not agree that this was a situation in which the lower court should have dispensed with the requirements of the rule. The rights of infants were involved under the terms of the previous order which fixed the allotment of support money for their benefit. The failure of the wife, the mother of the infants, to answer the petition within the allotted time did not justify the court in entering what amounts to a default order against the infants. On the contrary, counsel for the infants should have been given notice of the time and place of presentation for the entry of the order, as required by [the rules], and the opportunity of contesting its entry . . .

- 493 - Void or Voidable Orders Without Submission of Drafts

NAPERT v. NAPERT 261 Va. 45, 540 S.E.2d 882 (2001)

JUSTICE LACY delivered the opinion of the Court: In this appeal, we review a determination made on a bill of review that a decree of a trial court was entered in violation of Rule 1:13. In December 1997, Gerald Paul Napert (husband) filed a proceeding seeking a divorce a vinculo matrimonii from Theresa Marie Napert (wife). The wife filed a response, pro se, denying certain allegations of the bill of complaint. On October 9, 1998, the husband mailed a copy of a "Motion to Establish Permanent Child Support and For Entry of Final Decree of Divorce" to the wife. The motion designated the date and time he would seek entry of the decree. A hearing was held on November 13, 1998, but the wife did not appear. A decree of divorce was subsequently entered on November 16, 1998. The decree was silent as to child support. The wife filed a bill of review pursuant to Code § 8.01-623, asserting that the divorce decree was void because it was entered in violation of Rule 1:13. The Circuit Court of Fairfax County agreed, holding that the decree did not comply with either the endorsement or notice requirements of Rule 1:13 and that there was no indication on the decree that the trial court dispensed with those requirements. The trial court granted the relief sought in the bill of review, vacated the November 16, 1998 divorce decree declaring it void, and denied the husband's motion for reconsideration. The Court of Appeals affirmed the judgment of the trial court in an unpublished memorandum opinion holding that because the November 16, 1998 decree contained neither the endorsement of the wife or her counsel nor a dispensation of the endorsement by the court, the decree was "facially erroneous and void." We granted the husband an appeal. In his first assignment of error, the husband asserts that the Court of Appeals erred in construing and applying Rule 1:13. . . . The Court of Appeals held that the trial court did not dispense with the Rule's requirements because the decree did not specifically recite such dispensation. The husband asserts that this holding is in conflict with previous decisions of this Court. We agree with the husband. This Court has never held that, in order to modify or dispense with the requirements of Rule 1:13, a court must affirmatively state in its order that it is exercising its discretion to take such action. For example, in Smith v. Stanaway, 242 Va. 286, 410 S.E.2d 610 (1991), the trial court entered an order without endorsement of or notice to counsel and the order did not include any statement that the court had dispensed with such requirements as allowed by Rule 1:13. Nevertheless, this Court evaluated the validity of the order by considering whether the trial court abused its discretion in dispensing with the requirements of the Rule. Smith, 242 Va. at 288-89, 410 S.E.2d at 612. The concurrence in Smith specifically contended that the trial court should be required to recite its reasons for exercising its discretion to dispense with Rule 1:13, a requirement implicitly rejected by the majority. Smith, 242 Va. at 290-91, 410 S.E.2d at 613; see also Rosillo v. Winters, 235 Va. 268, 272-73, 367 S.E.2d 717, 719 (1988).

- 494 - Although a better practice would be for a trial court to include a statement reflecting its decision to exercise its discretion, in the absence of such a statement, we presume that a trial court exercised its discretion to dispense with the Rule's requirements. Courts are presumed to act in accordance with the law and orders of the court are entitled to a presumption of regularity. Beck v. Semones' Adm'r, 145 Va. 429, 442, 134 S.E. 677, 681 (1926). Likewise in this case, the divorce decree is entitled to a presumption that the trial court dispensed with the Rule's requirements. Accordingly, we hold that the Court of Appeals erred in approving the trial court's decision that the November 16, 1998 divorce decree was entered in violation of Rule 1:13. For these reasons, we will reverse the judgment of the Court of Appeals and dismiss the bill of review.

______

- 495 - SINGH v. MOONEY 261 Va. 48, 541 S.E.2d 549 (2001)

JUSTICE LACY delivered the opinion of the Court: Nathanial Mooney filed a medical malpractice action against Ram Singh, M.D., Sanyogta Singh (collectively "Singh"), Volunteer Healthcare Systems, Inc. d/b/a Dickenson County Medical Center, and Sabry Radawi, M.D., in March of 1995. By order entered October 2, 1998, Mooney was directed to make his expert witness available for deposition by October 20, 1998. The October 2 order also stated that if Mooney did not comply with the order, his action would be "subject to dismissal." Mooney failed to comply with the October 2 order, and, on October 21, Singh filed a motion to dismiss. Copies of this motion and proposed order were sent to Mooney along with a cover letter. In that letter, Singh requested the trial court to enter the dismissal order if it did "not receive any objections from counsel for the plaintiff within ten days of the date of this letter." Two days later, on October 23, the trial court entered the proposed order dismissing Mooney's action with prejudice. [Eleven months later, on] September 24, 1999, Mooney filed a motion to vacate the October 23, 1998 order, asserting it was void because it did not comply with Rule 1:13. Mooney also filed a motion for nonsuit. The trial court agreed with Mooney and held that " 'reasonable notice of the time and place of presenting such drafts . . .' of the final order was not properly given" to Mooney's counsel as required by Rule 1:13. The trial court "in its discretion" declared the October 23, 1998 order "void ab initio" and granted Mooney's motion to vacate the order. The trial court also granted Mooney's motion for a nonsuit and dismissed the original action without prejudice. We awarded Singh an appeal. On appeal, Singh presents the following single assignment of error: The trial court had no authority to vacate the final order and grant a nonsuit of this action on January 7, 2000, because the trial court lost jurisdiction of this action twenty-one days after the entry of the final order on October 23, 1998. Resolution of this issue requires consideration of whether an order entered in violation of Rule 1:13 is void ab initio or merely voidable. If it is the former, it can be challenged at any time; if the latter, it is not subject to collateral attack and is subject to the limitations of Rule 1:1. Parrish v. Jessee, 250 Va. 514, 521, 464 S.E.2d 141, 145 (1995). . . [Good discussion of void and voidable orders in Virginia omitted here. Ed.] [W]e conclude that our prior cases and the principles that underlie the distinction between orders which are void ab initio and those merely voidable are consistent with the conclusion that an order entered in violation of Rule 1:13 is voidable, not void ab initio. To the extent Cofer stands for the proposition that an order entered in violation of Rule 1:13 is void ab initio, it is overruled. In light of this conclusion, the trial court in this case did not have jurisdiction to vacate the October 23, 1998 order because more than twenty-one days had passed. Rule 1:1. Similarly the trial court was without jurisdiction to enter an order of nonsuit. Accordingly, we will reverse the judgment of the trial court and reinstate the October 23, 1998 order dismissing the action with prejudice.

- 496 - Entry of Judgment By the Court Without Notice

SMITH v. STANAWAY 242 Va. 286, 410 S.E.2d 610 (1991)

JUSTICE COMPTON delivered the opinion of the Court: The dispositive question in this appeal of a civil action for damages is whether an order drafted by the clerk of the trial court and entered by the trial judge, without notice to or endorsement of counsel, memorializing the court's action taken on the day of entry of the order sustaining a motion to strike the evidence, violated Rule 1:13 thereby rendering the order void.. . . . On September 18, 1990, during a jury trial of this action and at the conclusion of the plaintiff's case-in-chief, the trial court sustained the defendants' motion to strike the plaintiff's evidence. After consideration of argument of counsel on the motion, the trial judge stated that it "had no other alternative but to sustain the motion . . . . So the Court dismisses all three of the defendants." On that day, the draft of an order was prepared, apparently by the clerk of court. The order recited, in part: "The evidence of the plaintiff was presented, and at the conclusion thereof, the defendant[s], by counsel, moved to strike the evidence of the plaintiff on grounds stated in the record, which motion, after argument of counsel, was sustained and to which ruling of the Court, counsel for the plaintiff noted his objection and exceptions." "It is therefore Adjudged and Ordered that this case be dismissed and removed from the docket of this Court." The trial judge entered the order on the day of trial without notice to counsel of record and without their endorsement. On October 24, 1990, the trial judge granted defendants' motion for sanctions filed on September 25, and assessed the plaintiff with an award of $ 5,000 in favor of the defendants on account of attorney's fees. No order had been entered modifying, vacating, or suspending the September 18 order. The plaintiff filed a notice of appeal on October 23, 1990 and a petition for appeal on January 23, 1991. Subsequently, we awarded the plaintiff this appeal. The defendants moved to dismiss the appeal. Asserting the September 18, 1990 order was a final judgment, they contend that the October 23 notice of appeal was untimely under Rule 5:9(a) (notice must be filed within 30 days after entry of final judgment) and that the January 23 petition for appeal was untimely under Rule 5:17(a)(1) (petition must be filed not more than three months after entry of the order appealed from). In response, representing that his attorney was not aware of entry of the September 18 order "until more than thirty days later," the plaintiff asserts that the order was invalid because entered without notice or endorsement, and that, even if the order was valid, it was not "the final, appealable judgment in the case" because the sanctions issue had not been adjudicated. We disagree with the plaintiff.

- 497 - We hold that the September 18 order was valid because it was properly entered by the trial court. The last sentence of Rule 1:13 authorizes the trial court "in its discretion" to modify or to dispense with the requirements of notice or endorsement of counsel. We conclude that the trial court did not abuse its discretion. The circumstances of this case demonstrate the reason for inclusion of the last sentence in the Rule. Routinely throughout the Commonwealth, clerks of court (and occasionally trial judges) draft judgment orders daily in civil and criminal cases tried by jury memorializing the actions taken by the court on that day. These orders never carry endorsement of counsel and are entered by the court as a matter of course without notice to counsel. Notice or endorsement is unnecessary because, as here, counsel are present in court when the ruling is made orally and are fully aware of the court's decision; preparation and entry of an order in standard form is all that remains to be done to end the case in the trial court. Indeed, prompt disposition of the business of the trial courts would be jeopardized if Rule 1:13 were interpreted to require notice or endorsement under these circumstances; counsel of record have the duty and responsibility to examine the public record and to determine the date of entry of such orders. The circumstances of this case are significantly different from the situations existing in prior cases construing the Rule, or its predecessor, where we have found an abuse of discretion for failure to require notice or endorsement. For example, in Cofer v. Cofer, 205 Va. 834, 836, 140 S.E.2d 663, 665 (1965), the rights of infants to support money was affected by an order entered without notice to counsel for the infants. In Iliff v. Richards, 221 Va. 644, 649, 272 S.E.2d 645, 648 (1980), a cross-claim was effectively eliminated from the case by an order entered without notice to the cross- claimant. In Rosillo v. Winters, 235 Va. 268, 271-73, 367 S.E.2d 717, 718-19 (1988), the attorneys disagreed over the contents of draft orders but the trial court entered plaintiffs' draft without notice to other counsel and affected substantial rights of the defendant. It follows, therefore, that the September 18 order was a final, appealable order. Thus, the notice of appeal as well as the petition for appeal were untimely. Our determination that the September 18 order was final means that the trial court was without jurisdiction to enter the October 24 order of sanctions. Rule 1:1 provides that final judgments remain under the control of the trial court for only 21 days unless modified, vacated, or suspended during that time. Therefore, that order will be reversed. Consequently, we will annul the award of sanctions and dismiss the appeal as improvidently awarded.

- 498 - Note: A Remedy for "Undisclosed" Judgments?

Review Code § 8.01-428, set forth in the section on default judgments and relief from default. Subpart (C) was added in 1993 to cure the perceived injustice of this case, and was amended later to expand protections. Does it do the trick? The subsection reads:

C. Failure to notify party or counsel of final order. --If counsel, or a party not represented by counsel, who is not in default in a circuit court is not notified by any means of the entry of a final order and the circuit court is satisfied that such lack of notice (i) did not result from a failure to exercise due diligence on the part of that party and (ii) denied that party an opportunity to pursue post-trial relief in the circuit court or to file an appeal therefrom, the circuit court may, within 60 days of the entry of such order, modify, vacate, or suspend the order or grant the party leave to appeal. Where the circuit court grants the party leave to appeal, the computation of time for noting and perfecting an appeal shall run from the entry of such order, and such order shall have no other effect.

Other Exceptions. The Supreme Court has reiterated that endorsement of counsel is unnecessary under circumstances where counsel are present in court when the ruling is made orally and are fully aware of the court's decision. Thus, where the record shows that counsel for the opposing party was fully aware of the court's decision through an opinion letter and all that remained to be done was the preparation and entry of an order to end the case in the trial court, submission of signed draft orders was not required. In one case the Court noted that the time of day at which the order was to be presented for entry was subject to misunderstanding between counsel, but the record is clear that the trial court was aware of the circumstances and of counsel's objection to the order. Exercising its discretion to dispense with the requirements of counsel's endorsement, the trial court property informed counsel of its action and provided him with an ample opportunity to make an objection and, under these circumstances, the order was properly entered by the trial court. Davis v. Mullins, 251 Va. 141, 466 S.E.2d 90 (1996).

- 499 -

Hypotheticals

1. K sues in equity in an action arising under a contract, seeking injunctive relief and reformation of the agreement. D, the defendant, sets forth the defense that the contract is not in writing, and hence that the claim is barred by the statute of frauds. Plaintiff plans to contend at trial that the statute is inapplicable in this particular case because there was part performance of the terms of the agreement, thus taking the case out of the application of the statute. How should plaintiff proceed to present the contention? Can he simply offer evidence about the partial performance in the course of the trial? Are there steps he must take at the pleading stage?

2. Assume that K's contract action was filed on the law side of the court, seeking only damages, and that the statute of frauds defense is raised. Are the answers to the preceding questions any different?

3. V is the victim of a sexual assault in the parking lot of the G Grocery Store. She files suit against C, a check-out clerk in the store, charging him with the assault. C is served by the sheriff while he is working in the G store checking out groceries. During discovery V learns that G knew that C had a history of deviant sexual behavior and took no steps to protect its customers. The statute of limitations for suits against G has passed, but V moves the court for leave to amend her complaint to add a new count naming G Grocery as a new defendant on the theory that it failed to take steps to protect customers from a known danger. G opposes the motion and proffers a special plea of bar by the statute of limitations. What result under Code § 8.01-6?

4. Assume that V sued C within the period of limitations after the assault mentioned above. During discovery her counsel becomes convinced that C was not the perpetrator. V further learns that F, a felon, is often confused for C around town because they have similar features. V is shown a picture of F and identifies him as the true perpetrator. The period of limitations for claims against F appears to have run, but V proposes simply to amend her complaint to correct the misnomer, substituting F for C as the named defendant. F opposes this application. What result?

5. On the same facts as question 4, would it make any difference if C and F were acquaintances, and shortly after C was sued he commented to F one evening that he (C) had been wrongly accused of an attack on V on the date in question and that V was trying to sue the perpetrator?

6. S retains counsel to bring an action for slander in a radio broadcast. Her counsel files the complaint with the clerk of court, along with an envelope containing a tape recording of the broadcast and typewritten transcript thereof. The complaint is served upon defendant B, the broadcaster, but the tape and transcript are not provided to B. B

- 500 - files a demurrer to the complaint, pointing out that the pleading filed by S does not set forth the actual words of the alleged defamation, but simply refers to a tape. How should the court rule?

7. In a negligence suit arising from a car crash, defendant takes the deposition of B, the plaintiff. B admits that he receives disability income because he is legally blind, and that he does not have a driver's license because he couldn't pass the eye test. B concedes that he couldn't see the traffic on the occasion of the crash. Defendant moves for summary judgment, annexing copies of the relevant pages of B's deposition transcript. What result?

8. If the summary judgment motion using deposition transcripts in the preceding question is denied, could plaintiff obtain and use other supporting materials in a renewal of the motion?

9. J, a Circuit Court judge, presided over a bench trial in a contract action. After the hearing she took the matter under submission for two weeks to study the evidence and reach a conclusion. Thereafter judge J entered an order awarding judgment to one of the parties. The answer was very clear to judge J, so she omitted to ask counsel to review a draft order. The losing party objects to the order as entered. What result?

- 501 - - 502 - Chapter 9 Joint Tortfeasors – Release and Contribution

A. Introduction ...... 503 Key Statutes ...... 505 Code § 8.01-34 When Contribution Among Wrongdoers Enforced...... 505 Code § 8.01-35.1 Effect of Release or covenant not to sue ...... 505 Code § 8.01-442 In Joint Actions on Contract Plaintiff, though Barred as to Some, may have Judgment Against Others ...... 506 Code § 8.01-443 Joint Wrongdoers; Effect of Judgment Against One...... 506 General Operation of the Doctrines...... 508 Hayman v. Patio Products...... 508 Nationwide Mutual Insurance v. Jewel Tea Company...... 511 Requirement of Plaintiff Having a Viable Claim Against the Contribution Defendant...... 514 Pierce v. Martin ...... 514 Gemco-Ware, Inc. v. Rongene Mold and Plastics...... 517 B. Joint Tortfeasors and Contribution: SELF TEST ...... 520 C. Synthesis on Contribution Law and Procedure...... 521 Tazewell Oil Co. v. United Virginia Bank...... 521 D. The Problem of Verdicts and Code §8.01-35.1 ...... 529 NOTES on Suing and Settling ...... 530

A. Introduction

In short compass, the Virginia modifications on the common law of joint tortfeasors may be summarized as follows: „ Necessary or Proper Parties? Joint tortfeasors are merely "proper" parties under modern Virginia law; it is not necessary to join all of them in a single action if plaintiff, for whatever reason, elects to proceed against only one or several defendants but fewer than all joint tortfeasors. Separate actions may be maintained against several joint tortfeasors. „ Election of Remedies? Separate suits, and even separate judgments against one or more out of a larger group of tortfeasors, do not amount to a "binding election of remedies" barring action against other joint tortfeasors. Nor is the seeking of enforcement of judgments against one or more a bar. However, there is only right to recover fully for the tort, and thus satisfaction of a judgment against one or more tortfeasors does operate to release others jointly liable. „ Syncopated Proceedings in One Action. If a plaintiff names several tortfeasors but is able to obtain service against fewer than all, plaintiff may proceed to judgment

- 503 - against those before the court without forfeiting rights against the others if the action fails to yield full satisfaction of the claim. „ Contribution. Rights to contribution may arise in several circumstances. If one of several tortfeasors is sued, and found liable, a claim for contribution may later be made by that defendant against other alleged tortfeasors for a sharing of the liability. [Most joint tortfeasors, if sued individually, would opt to bring the others in as third- parties defendants to assure their participation in the principal action]. Settlement by one tortfeasor may give rise to a claim for contribution from non-settling tortfeasors, if the settlement resulted in discharge of the non-settling parties' exposure as well. If the release obtained, however, protects only the settling party, no right to obtain contribution from others exists. In that instance, the plaintiff is not barred from proceeding against the non-settling parties, but any moneys received from the first settlement will pro rata reduce any recovery plaintiff may later obtain against the non- settling parties. „ Third-Party Practice. A defendant who is sued may, of course, bring in third- parties as additional defendants in circumstances such as alleged joint torts, since the third-party may be liable, by contribution or otherwise, for all or part of the plaintiff's claim against the principal defendant. See Chapter 11, RESPONSIVE PLEADINGS, COUNTERCLAIMS, CROSS-CLAIMS AND THIRD-PARTY PRACTICE.

- 504 - Some key Code provisions on contribution and release of tortfeasors are:

§ 8.01-34. When Contribution Among Wrongdoers Enforced. Contribution among wrongdoers may be enforced when the wrong results from negligence and involves no moral turpitude.

§ 8.01-35.1. Effect of Release or covenant not to sue in respect to liability and contribution A. When a release or a covenant not to sue is given in good faith to one of two or more persons liable for the same injury to a person or property, or the same wrongful death: 1. It shall not discharge any other person from liability for the injury, property damage or wrongful death unless its terms so provide; but any amount recovered against the other person or any one of them shall be reduced by any amount stipulated by the covenant or the release, or in the amount of the consideration paid for it, whichever is the greater. In determining the amount of consideration given for a covenant not to sue or release for a settlement which consists in whole or in part of future payment or payments, the court shall consider expert or other evidence as to the present value of the settlement consisting in whole or in part of future payment or payments. A release or covenant not to sue given pursuant to this section shall not be admitted into evidence in the trial of the matter but shall be considered by the court in determining the amount for which judgment shall be entered; and 2. It shall discharge the person to whom it is given from all liability for contribution to any other person liable for the same injury to person or property or the same wrongful death. B. A person who enters into a release or covenant not to sue with a claimant is not entitled to recover by way of contribution from another person whose liability for the injury, property damage or wrongful death is not extinguished by the release or covenant not to sue, nor in respect to any amount paid by the person which is in excess of what was reasonable. C. For the purposes of this section, a covenant not to sue shall include any "high-low" agreement whereby a party seeking damages for injury to a person or property, or for wrongful death, agrees to accept as full satisfaction for any judgment no more than one sum certain and the party or parties from whom the damages are sought agree to pay no less than another sum certain regardless of whether any judgment rendered at trial is higher or lower than the respective sums certain set forth in the agreement and whereby such party provides notice to all of the other parties of the terms of such "high-low" agreement immediately after such agreement is reached. D. A release or covenant not to sue given pursuant to this section shall be subject to the provisions of §§ 8.01-55 and 8.01-424.

- 505 - E. This section shall apply to all such covenants not to sue executed on or after July 1, 1979, and to all releases executed on or after July 1, 1980. This section shall also apply to all oral covenants not to sue and oral releases agreed to on or after July 1, 1989, provided that any cause of action affected thereby accrues on or after July 1, 1989. A release or covenant not to sue need not be in writing where parties to a pending action state in open court that they have agreed to enter into such release or covenant not to sue and have agreed further to subsequently memorialize the same in writing.

Broadening the Application of the Statute? In 2007 the General Assembly made a series of amendments to Code § 8.01-35.1 which appear calculated to preserve options for its application beyond the strict confines of traditional tort liability focusing on releases by a "tortfeasor.'' These are reflected above. The title of the section is generic, referring to the "[e]ffect of release or covenant not to sue in respect to liability and contribution'' and the 2007 changes in subsection A, substituted "liable for the same injury to a person or property'' for "in tort for the same injury, or the same property damage''; in subdivision A 1, substituted "other person'' for "of the other tort feasors'' and "person'' for "tort feasor'' in the first sentence; in subdivision A 2, substituted "person'' for "tort feasor'' and ``person liable for the same injury to person or property or the same wrongful death'' for ``tort feasor.'' In subsection B the amendments in 2007 substituted "person'' for "tort feasor'' throughout; and in subsection C, substituted "for injury to a person or property, or for wrongful death'' for "in tort'' near the beginning and "parties'' for "tort feasors'' near the end. One probable reason for such amendments is to deal with circumstances where a "person liable'' may be a non-tortfeasor whose liability arises under respondeat superior or another form of derivative liability.

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Other important sections of the Code on these issues are:

§ 8.01-442 In Joint Actions on Contract Plaintiff, though Barred as to Some, may have Judgment Against Others. In an action or motion, founded on contract, against two or more defendants, although the plaintiff may be barred as to one or more of them, yet he may have judgment against any other or others of the defendants, against whom he is not so barred.

§ 8.01-443. Joint Wrongdoers; Effect of Judgment Against One. A judgment against one of several joint wrongdoers shall not bar the prosecution of an action against any or all the others, but the injured party may bring separate actions against the wrongdoers and proceed to judgment in each, or, if sued jointly, he may proceed to judgment against them successively until judgment has been rendered against, or the cause has been otherwise disposed of as to, all of the defendants, and no bar shall arise as to

- 506 - any of them by reason of a judgment against another, or others, until the judgment has been satisfied. If there be a judgment against one or more joint wrongdoers, the full satisfaction of such judgment accepted as such by the plaintiff shall be a discharge of all joint wrongdoers, except as to the costs; provided, however, this section shall have no effect on the right of contribution between joint wrongdoers as set out in § 8.01-34. REVISERS' NOTE Section 8.01-443 changes the former law so that discharge of all joint tort-feasors, except as to costs, occurs only when one of multiple judgments has been fully satisfied and has been accepted as such by the plaintiff. "Satisfaction" is determined by case law and in an appropriate situation would include, besides full payment, an accord and satisfaction or a covenant not to sue supported by consideration. (See Shortt v. Hudson Supply Co., 191 Va. 306, 60 S.E.2d 900 (1950). See also Dickenson v. Tabb, 208 Va. 184, 156 S.E.2d 795 (1967) and Harris v. City of Roanoke, 179 Va. 1, 18 S.E.2d 303 (1942). Right of contribution is preserved.

- 507 - General Operation of the Doctrines

HAYMAN v. PATIO PRODUCTS 226 Va. 482, 311 S.E.2d 752 (1984)

JUSTICE COCHRAN delivered the opinion of the Court. . . . .The facts are undisputed. On the evening of June 10, 1977, Thomas B. Hayman, II, then a minor, attended an outdoor graduation party at the home of a friend. A garden torch was knocked over, spilling liquid fuel on Hayman. The fuel ignited and burned Hayman severely. Hayman, suing by his next friend, initiated two separate actions to recover damages for his injuries. The first, numbered 1683, named as defendants the hosts and certain guests at the party, and alleged that the negligence of each was a proximate cause of Hayman's injuries. The second, numbered 1684, named as defendants Murphy, the retail seller of the garden torch, and Patio Products, Inc., the wholesale distributor, and alleged negligence and breaches of implied warranties. Patio made no appearance; Murphy filed grounds of defense and cross-claim against Patio for indemnification. On October 19, 1979, the action against the individual defendants was settled for $43,500 with the approval of the trial court. The following document, executed by the parties, was tendered to the court: COVENANT NOT TO SUE (At Law No. 1683) Now comes the plaintiff herein, Thomas B. Hayman, II, an infant, who sues by and through his mother and next friend, Mary Belle Hayman, by counsel; George C. Stein, Sr. and Dawn Stein, by counsel; Stephen Simpson, an infant, by counsel; and Timothy H. Morgan, an infant, by counsel, and represent that, by agreement of the parties aforesaid, the parties have agreed to enter into this Covenant Not to Sue based upon the following terms and conditions: 1. This Covenant Not to Sue is entered into in conformity with the provisions of Section 8.01-35.1 of the Code of Virginia of 1950, as amended. 2. That the defendants herein, George C. Stein, Sr., Dawn Stein, Stephen Simpson and Timothy H. Morgan, will pay unto the said Mary Belle Hayman, mother of the plaintiff herein, Thomas B. Hayman, II, and his attorneys, Montague, Montague and Long, Ltd., or as ordered by the Court

- 508 - pursuant to Section 8.01-424 of the Code of Virginia of 1950, as amended, the sum of Forty-Three Thousand, Five hundred and 00/100 Dollars ($43,500.00). 3. That upon payment of the said Forty-Three Thousand, Five Hundred and 00/100 Dollars ($43,500.00) and pursuant to Section 8.01-35.1, supra, said payments shall discharge the said George C. Stein, Sr., Dawn Stein, Stephen Simpson and Timothy H. Morgan from all liability to the plaintiff and from all liability for contribution to any other tort feasor. 4. As provided in Section 8.01-35.1 mentioned aforesaid, this Covenant Not to Sue shall not in anywise limit the plaintiff's right to proceed with that suit currently pending before this Court under the style of "Thomas B. Hayman, II, an infant, etc. vs. Patio Products, Inc. and G.C. Murphy Company, At Law No. 1684 - 9/29/77".

On the same day, the trial court entered an order approving the agreement and further providing: NOW, THEREFORE, it is further ADJUDGED, ORDERED and DECREED that said payments do hereby discharge the said George C. Stein, Sr., Dawn Stein, Stephen Simpson, and Timothy H. Morgan from all liability to the plaintiff and for his mother and next friend and for all liability for contribution to any other tort feasor; provided, however, that nothing herein contained shall limit or prejudice the right of the plaintiff under the conditions prescribed in Section 8.01-35.1, as aforesaid, to prosecute a judgment of that certain case now pending in this Court and styled "Thomas B. Hayman, II, an infant, etc. vs. Patio Products, Inc. and G.C. Murphy Company, At Law No. 1684 ¬9/29/77". Murphy filed a motion for summary judgment in the action numbered 1684, alleging that it was released by the compromise settlement and payment approved in the other action. The trial court, with a different judge presiding, granted the motion and entered summary judgment in favor of Murphy on January 14, 1981. By Chapter 679 of the 1979 Acts of the General Assembly, effective July 1, 1979, [§ 8.01-35.1] was added, the current version of which is set forth above. . . . In 1980, Code § 8.01-35.1 was amended to include releases as well as covenants not to sue. Acts 1980, c. 411. In 1982, the statute was further amended to apply to covenants not to sue executed on or after July 1, 1979, and to release executed on or after July 1, 1980, regardless of the dates the causes of action accrued. Acts 1982, c. 196. Since the agreement in the present case was executed in September of 1979, it is subject to the provisions of the statute as originally enacted. For many years under the common law, before the enactment of Code § 8.01-35.1, a release of, or an accord and satisfaction with, one of several joint tort-feasors operated as a release of all. Wright v. Orlowski, 218 Va. 115, 235 S.E.2d 349 (1977). The rule applied even if language in the settlement agreement provided that it should not release the other tort-feasors. Shortt v. Hudson Supply Co., 191 Va. 306, 60 S.E.2d 900 (1950); Ruble v. Turner, 12 Va. (2 Hen. & M.) 38 (1808). A covenant not to sue one joint tort- feasor, however, did not release the others. Lackey v. Brooks, Adm'r, 204 Va. 428, 432, 132 S.E.2d 461, 464-65 (1963).

- 509 - If, as Murphy contends, a covenant not to sue coupled with payment and discharge of a joint tort-feasor after July 1, 1979, released the other joint tort-feasors, the enactment of Code § 8.01-35.1 merely affirmed what had been the common law for at least 170 years. We will not attribute such a useless gesture to the General Assembly. We believe the General Assembly intended to change a which tended to reward a recalcitrant tort-feasor at the expense of a joint tort-feasor who was willing to settle out of court. We believe the legislative intent, as shown by the statutory language, was to promote the use of a covenant not to sue by permitting payment thereunder and discharge of one joint tort-feasor without causing the covenant to effect the release of the other joint tort-feasors. The statute provides that any settlement reached between a claimant and a tort- feasor "shall reduce the claim against the [other tort-feasors] to the extent of any amount stipulated by the covenant, or in the amount of the consideration paid for it." Code § 8.01-35.1(A)(1) (emphasis added). Part B of the statute speaks of a "settlement" between a "claimant" and a "tort feasor." Under the common law, payment of a consideration for a settlement is the equivalent of an accord and satisfaction, and "[t]he making of an accord and the acceptance of satisfaction will effect a release." Wright, 218 Va. at 120, 235 S.E.2d at 353. We hold, however, that a covenant not to sue, drafted in accordance with the statutory provisions, is excluded from this rule. The statute authorizes payment of consideration under the covenant not to sue without discharging non-paying joint tort-feasors. The statute protects the paying tort-feasor from liability for contribution and prohibits him from exacting contribution from non- paying joint tort-feasors against whom claims remain outstanding. The statute facilitates prompt settlement, payment, and discharge of paying tort-feasors without releasing those non-paying joint tort-feasors who prefer to have their liability determined in litigation, with its attendant delays.

- 510 - NATIONWIDE MUTUAL INS. v. JEWEL TEA COMPANY 202 Va. 527, 118 S.E.2d 646 (1961)

JUSTICE SNEAD delivered the opinion of the court. Ralph D. Hilton and Nationwide Mutual Insurance Company instituted a suit in equity against Jewel Tea Company, Incorporated, to obtain contribution from Jewel as a joint tort-feasor after Nationwide had settled claims for personal injuries and property damage resulting from an automobile collision. [Hilton’s son Randolph veered around a parked Jewel Tea truck and crashed into Dr. Buck’s car. In the prior litigation Buck sued the Hiltons and the case was settled for the total sum of $2,555.74. Nationwide paid that amount and started a second case, seeking contribution from Jewel Tea because parking on that curve of the road caused the crash.] The bill prayed that respondent be required to pay to complainant, by way of contribution, $1,277.88, being one-half of the amount of the two claims settled. It is contended by complainant that it made payments to Dr. Buck and Lyons on behalf of Randolph Hilton, an additional assured under his father's policy, and by virtue of such payments it is entitled to contribution from Jewel as joint tort-feasor. Respondent challenges complainant's allegation in the bill that it was entitled to be subrogated to the right of Ralph D. Hilton to contribution because of the settlements made by it on his behalf under the policy. . . . No right of contribution among wrongdoers existed at common law. 4 M.J., Contribution, § 22, p. 527, note 10, and cases there cited. That right is now given by [Code § 8.01-34] and may be enforced when the wrong is a mere act of negligence and involves no moral turpitude. To enforce contribution against a joint tort-feasor a cause of action by the person injured against that wrongdoer must lie. Nationwide insists that because the Buck car was in its proper lane when struck, the concurring negligence of Jewel and Randolph Hilton was the proximate cause of the damage to Dr. Buck's automobile and the personal injury to Lyons and both Dr. Buck and Lyons had causes of action against the joint tort-feasors. Complainant maintains that the interests of Nationwide and Jewel were served by complainant's making prompt and reasonable settlements of the claims and that it is entitled to enforce the right of contribution possessed by Randolph Hilton, its additional assured. Randolph Hilton's right of contribution is dependent upon a determination of the issues of whether the joint negligence of Randolph Hilton and Jewel's agent was the proximate cause of the injuries sustained by Dr. Buck and Lyons, and whether Dr. Buck and Lyons were contributorily negligent.

- 511 - The principle of subrogation has been liberally applied in Virginia. Federal Land Bank v. Joynes, 179 Va. 394, 402, 18 S.E.2d 917. The right to contribution is not a personal right of the tort-feasor but is a chose in action to which an insurer may be subrogated. McKay v. Citizens Rapid Transit Company, 190 Va. 851, 859, 59 S.E.2d 121. The insurance company was indemnitor of its additional assured, Randolph Hilton, and because he was an alleged tort-feasor, it could, upon making settlement of the claims in his behalf, be subrogated to his right of contribution from a joint tort- feasor. A right of action for contribution will lie though no previous judgment determining the issues of negligence and contributory negligence has been obtained. Some jurisdictions require that a judgment be obtained against both tort-feasor and paid by one before he may seek contribution from the other. Annotation 85 A.L.R. 1091; 122 A.L.R. 520; 141 A.L.R. 1207. There is nothing in our statute which requires that the issues of negligence and contributory negligence be adjudicated before an action for contribution may be brought. It is, however, necessary that the injured person have a cause of action against the tort-feasor from whom contribution is sought. If the alleged joint tort-feasor challenges the right to contribution on the grounds that the compromise settlement is unreasonable, excessive, made in bad faith, or that he was not concurrently negligent, or that his negligence was not a proximate cause of the injuries compromised, he may, in the suit for contribution, produce evidence to rebut the allegation and proof of negligence and show that the compromise was unreasonable and excessive, and have the issues adjudicated. Consolidated Coach Corp. v. Burge, 245 Ky. 631, 54 S.W.2d 16, 85 A.L.R. 1086. Respondent is not bound by the compromise settlements since it was not a party to them, nor is it deprived of a trial by jury as to its liability for the damages sustained by Dr. Buck and Lyons. Complainant must establish the negligence of both Randolph Hilton and Jewel as concurring causes of the injuries; Jewel has the right to rebut the evidence tending to show its negligence or that it was a proximate cause of the injuries. The burden is upon Jewel to show that the compromises were not made in good faith or that they were unreasonable and excessive if such is a defense. 13 Am. Jur., Contribution, § 119, p. 98. There is no merit in respondent’s claim that Nationwide’s claim is barred by the statute of limitations . . . . The basic principle of equity is that where two or more persons are subject jointly to liability, it should be borne by them equally. The right to contribution is not based upon express contract or agreement. [The Code] specifically states that contribution may be enforced between wrongdoers when the act of negligence involves no moral turpitude. This is a right that is given by statute and arises when, and only when, one tort-feasor has paid a claim for which they are both liable. The right of action arises upon payment or discharge of the obligation, and it is then that the statute of limitations begins to run. Van Winckel v. Carter, 198 Va. 550, 556, 95 S.E.2d 148; McKay v. Citizens Rapid Transit Co., supra, at pages 857, 858; 13 Am. Jur., Contribution, § 88, p. 77. In McKay v. Citizens Rapid Transit at pages 858, 859, we said: "We therefore hold that the statute of limitations did not begin to run until the payment was made by the indemnitors . . . [And the personal injury limitations period is inapplicable] we are of opinion that the . . . cause of action in cases of this kind arises out of an implied promise to pay, and therefore the three-year statute of limitations would apply. 18 C.J.S., Contribution, sec. 13-

- 512 - b, p. 22; 13 Am. Jur., Contribution, sec. 84, p. 75; Houston v. Bain, 170 Va. 378, 196 S.E. 657." Here Nationwide settled the claims of Dr. Buck and Lyons by making payment in compromise on January 21, 1957, and this suit was brought on May 27, 1959, well within the three-year statute of limitations. . . . The decree is reversed and the case remanded for determination of the issues.

- 513 -

Requirement of Plaintiff Having a Viable Claim Against the Contribution Defendant

PIERCE v. MARTIN 230 Va. 94, 334 S.E.2d 576 (1985)

JUSTICE STEPHENSON delivered the opinion of the Court. This suit for contribution, Code § 8.01-34, was brought by Lewis William Martin for the benefit of Commercial Union Insurance Company (Martin) against Clyde Wilson Pierce to recover $108,250, one-half the sum which Martin paid to certain injured parties. Pierce contends, among other things, that because the injured parties as a matter of law could not have recovered against him, the trial court erred in granting Martin a judgment against him for contribution. Our resolution of this contention disposes of this appeal. Pierce and Martin were involved in a motor vehicle collision on July 2, 1979, about 6:00 p.m., on Route 501, in Campbell County. Route 501 was a two-lane highway running north and south. Each lane was approximately 12 feet wide. In the vicinity of the accident, the highway was relatively straight and level. The weather was dry and visibility was good. Pierce was driving in a southerly direction. His passengers were his daughter and son-in-law, Mary and John Burton, his wife, Frances, and three of his infant grandchildren. Martin, an employee of Marvin Templeton, was operating one of Templeton's dump trucks in a northerly direction, following another Templeton dump truck (the front dump Truck).

The physical evidence established that the Pierce and Martin vehicles collided in the southbound lane, partly on the shoulder. The Pierce vehicle left skid marks

- 514 - measuring 101 feet and 11 inches, all in the southbound lane. There was no evidence that the Pierce vehicle made any marks in the northbound lane. Martin's truck left skid marks of 204 feet and one inch. These marks began and continued in the northbound lane until they veered sharply to the left across the southbound lane to the point of collision. When the Martin truck came to rest, it was facing south, having spun around approximately 180 degrees. The front dump truck left skid marks in the northbound lane north of the point of collision. A portion of these marks was parallel with a portion of Pierce's skid marks. The testimonial evidence conflicted sharply. Martin and his witnesses testified that Pierce was traveling southbound at 70 to 80 miles per hour, and that while passing a number of vehicles, Pierce forced the front dump truck off the pavement of the highway. When this occurred, Martin suddenly applied his brakes to avoid striking the front dump truck and Pierce's car, and Martin's truck skidded to the point of collision. Pierce testified that he was driving in the southbound lane at a lawful speed when the Martin truck suddenly entered his lane. It appeared to Pierce that Martin was attempting to pass the front dump truck. While in the act of passing, Martin's truck spun around in front of Pierce. In trying to avoid Martin, Pierce applied his brakes and moved his automobile to the right. However, the vehicles collided in the southbound lane, partly on the shoulder. Each of Pierce's three adult passengers corroborated his version of the accident, placing sole responsibility for the accident upon Martin and completely exonerating Pierce. All of Pierce's passengers sued Martin for injuries sustained in the accident; none sued Pierce. Martin reached a compromise settlement aggregating $216,500, apportioned among the passengers as follows: John Burton, $150,000; Mary Burton, $60,000; Frances M. Pierce, $5,000; Ronnie Lloyd, an infant, $500; Kevin Lloyd, an infant, $500; and Cindy Lloyd, an infant, $500. Martin's contribution judgment was for one-half of this sum. It is firmly established that a contribution plaintiff cannot recover from a contribution defendant unless the injured party could have recovered against the contribution defendant. Bartlett v. Recapping, Inc., 207 Va. 789, 153 S.E.2d 193 (1967); see also VEPCO v. Wilson, 221 Va. 979, 277 S.E.2d 149 (1981); Norfolk Southern v. Gretakis, 162 Va. 597, 174 S.E. 841 (1934); In Bartlett, we said: Code [§ 8.01-34] provides for contribution among wrongdoers for mere acts of negligence not involving moral turpitude. However, before contribution may be had it is essential that a cause of action by the person injured lie against the alleged wrongdoer from whom contribution is sought. 207 Va. at 792-93, 153 S.E.2d at 196. In Holland v. Holland, 217 Va. 874, 234 S.E.2d 65 (1977), we applied the doctrine first pronounced in Massie v. Firmstone, 134 Va. 450, 114 S.E. 652 (1922). We held that "if a litigant, a person of average intelligence and in possession of his faculties, testifies clearly and unequivocally to facts within his knowledge which show as a matter of law he has no case, he is bound thereby and may not recover." 217 Va. at 874, 234 S.E.2d at 66. We also ruled that a plaintiff who testified that another automobile "cut right in front of" the automobile operated by her husband and that her husband "didn't do anything wrong" had absolved her husband of any wrongdoing. 217 Va. at 875, 234

- 515 - S.E.2d at 66. We found that these expressions were not merely non-binding opinions but were "clear and unequivocal" statements of fact which triggered application of the Massie v. Firmstone doctrine, 217 Va. at 876, 234 S.E.2d at 67. Martin concedes that, had the injured adults sued Pierce, Massie v. Firmstone would have barred recovery. He contends, however, that the above-stated rule barring a contribution plaintiff is "not applicable to the facts and posture" of the present case, but is confined to legal barriers (such as the exclusive remedy afforded under worker's compensation) and to immunities (such as those afforded to governments and charities). We disagree. In Bartlett, we applied the rule barring a contribution plaintiff from recovering against a contribution defendant. The bar was not based on a legal barrier or a legal immunity. It was based, instead, on a failure of proof. The evidence failed to establish that the contribution defendant breached any duty owed the injured parties. Because the contribution defendant was not liable to the injured parties, the contribution plaintiff was barred from recovering against her. 207 Va. at 794, 153 S.E.2d at 197. The same rationale applies in the present case. Had the injured adults asserted a claim against Pierce, in view of their unequivocal testimony, the Massie v. Firmstone doctrine would have barred their recovery. Thus, Martin is not entitled to contribution for the sums he paid the injured adults. The decision we reach, however, does not affect the judgment as it relates to the injured infants. They did not testify, and the injured adults' testimony would not have bound these infants. Thus, the judgment, as it relates to the infants ($750) will be affirmed. In all other respects, however, the judgment will be reversed.

- 516 - GEMCO-WARE, INC. v. RONGENE MOLD AND PLASTICS 234 Va. 54, 360 S.E.2d 342 (1987)

JUSTICE COMPTON delivered the opinion of the Court. . . On May 1, 1980, Lillian W. Smith was burned when the handle of a tea kettle separated from the kettle causing boiling water to spill on her right leg. On April 26, 1982, just before the applicable statute of limitations expired, Smith brought the present damage suit against the seller of the kettle; the manufacturer and distributor, appellant Gemco-Ware, Inc.; and the manufacturer of the handle. Although Ron-Gene, Inc., was named in the plaintiff's complaint as the handle manufacturer, a separate and distinct corporation, appellee Rongene Mold and Plastics Corporation, actually made the handle. In March 1983, after a motion to dismiss had been filed by Ron-Gene, Inc., Gemco filed by leave of court a third-party motion for judgment against Rongene Mold and Plastics Corporation (Rongene). Gemco sought contribution or indemnification from Rongene, asserting that if the plaintiff's claims were true, her injuries and damages "were caused exclusively and/or jointly" by Rongene due to its breach of certain implied warranties. Subsequently, Rongene filed a demurrer and plea in bar. The third-party defendant contended that when the third-party complaint was filed in March 1983, the statute of limitations had expired as to any cause of action the plaintiff may have had against Rongene. Therefore, Rongene asserted, any cause of action for contribution or indemnity by Gemco against Rongene was also barred by the statute of limitations. The trial court sustained Rongene's position, holding that Gemco's claim for contribution was time-barred because such claim was "contingent upon the plaintiff having an enforceable cause of action" against Rongene. We awarded Gemco this appeal from the January 1984 order dismissing the third-party motion for judgment. On appeal, Rongene contends the trial court correctly dismissed Gemco's action for contribution or indemnity. Rongene argues that under "the substantive law of Virginia, the right of contribution among joint-tortfeasors, being derivative in nature and asserting no independent cause of action, exists only where the injured party has an enforceable cause of action as to the joint tort-feasor against whom contribution is sought." Continuing, Rongene says that "Virginia law withholds the right of contribution as against a joint tort-feasor who cannot in law be forced to answer to the injured party for his wrongdoing." Concluding, Rongene says that when Gemco filed its

- 517 - third-party motion for judgment against Rongene, "the injured party had no enforceable cause of action against Rongene because the applicable statute of limitations had expired." We do not agree with Rongene's argument and hold that the trial court erred in dismissing the third-party complaint. . . [T]he right to recover contribution arises upon payment or discharge of the common obligation, "and it is then that the statute of limitations begins to run." Nationwide Mutual Insurance Co. v. Jewel Tea Co., 202 Va. 527, 532, 118 S.E.2d 646, 649 (1961); McKay v. Citizens Rapid Transit Co., 190 Va. 851, 857-59, 59 S.E.2d 121, 123-24 (1950). It should be noted that, according to statute and Rule of Court, a claim based on future potential liability in contribution may be asserted in a third-party motion for judgment filed in a pending suit even though the third party claimant has made no payment or otherwise discharged any claim against him. Code § 8.01-281(A). These provisions are mere procedural devices to promote judicial economy by having all claims, actual or potential, arising from the same transaction or occurrence determined in one proceeding. See Valley Landscape Co. v. Rolland, 218 Va. 257, 263, 237 S.E.2d 120, 124 (1977) [set forth in Chapter 11 of these materials. Ed.]. However, these provisions have no substantive effect on the settled Virginia principles set forth in Jewel Tea. . . Against this background, we turn to Rongene's argument that the right to contribution is dependent upon the existence of an enforceable cause of action by the plaintiff against the party from whom contribution is sought and that because the statute of limitations on the plaintiff's claim against the third-party defendant had run when the third-party complaint was filed, the claim for contribution thereby was barred. In VEPCO v. Wilson, supra, relied on by Rongene, we held there was no right of contribution because no cause of action existed in favor of the injured parties in that their exclusive remedy was under the Workers' Compensation Act. In Norfolk Southern R.R. v. Gretakis, 162 Va. 597, 174 S.E. 841 (1934), also relied upon by Rongene, we held there was no right to contribution against a father by a railroad because the injured party, an unemancipated minor, had no cause of action against the father, according to the then-existing doctrine of parental immunity. But, in those cases, neither of which involved the bar of a statute of limitations, the injured parties never had an enforceable cause of action against the target of the contribution claim. In the present case, the plaintiff had an enforceable cause of action against Rongene but, at the time the third-party complaint was filed, her remedy -- her right of action -- against Rongene was barred. Nonetheless, in order for contribution to lie, the injured party's cause of action against the third-party defendant need not be presently enforceable; it merely is necessary that the plaintiff, at some time in the past, have had an enforceable cause of action against the party from whom contribution is sought. Jones v. Meat Packers Equipment Co., No. 81-871-N, slip op. at 5 (E.D. Va. July 5, 1984). In other words, before contribution will lie it is essential that a cause of action by the person injured have existed against the third-party defendant. But if such cause of action existed, the right of action to recover contribution arises upon discharge of the common obligation and the statute of limitations begins to run at that time. Were the rule otherwise, the exercise of a defendant's right of contribution, a doctrine based on principles of fairness, equality of burden, and equality of benefit,

- 518 - could be frustrated by a plaintiff. Such a result is demonstrated by the facts of the present case. Here, the plaintiff waited to sue until several days before the statute of limitations on her personal injury claim expired. The main defendant, later third-party plaintiff, was not served with process until after the personal-injury limitations period had run. Thus, under the rule advocated by Rongene, the personal-injury plaintiff, by her accidental or intentional conduct in filing her suit at the last minute, could have extinguished the defendant's right to contribution, an injustice to be avoided. In addition, the foregoing rule is buttressed by the fact that the legislature has recognized, in the field of personal-injury litigation, the distinction between the main action and the derivative claim for contribution. The General Assembly has provided a two-year statute of limitations for every action for personal injuries, Code § 8.01- 243(A), and a three-year limitations period for contribution actions, actions based upon implied contracts, Code § 8.01-246(4). . . . Accordingly, the judgment below is reversed and the case is remanded for further proceedings on Gemco's third-party motion for judgment against Rongene.

- 519 - B. Joint Tortfeasors and Contribution: S E L F T E S T

Code §§ 8.01-35.1, 8.01-443 and the Common Law

ASSUME: Plaintiff sues tortfeasor Tf-1 but not Tf-2 or Tf-3 who were involved in the same occurrence.

Situations 1-3 are governed by Code § 8.01-443 (set forth in the readings), and common Going to Judgment law "contribution" cases we read.

#1. P gets a judgment against Tf-1 for all damages, but has not collected. P now sues Tf-2 and Tf-3 on the same claim. Is the prior suit a defense?

#2. P gets a judgment against Tf-1 for all damages, but has not collected. P now sues Tf-2 and Tf-3, wins and collects from them. Can they thereafter commence a contribution action against Tf-1?

#3. P gets a judgment against Tf-1 for all damages, and Tf-1 pays it. P now sues Tf-2 and Tf-3 on the same claim. Is the prior suit a defense?

These situations are governed by Code § 8.01-35.1 (which is Settling set forth in the Joint Tortfeasor readings ).

#4. P sues Tf-1, and settles, signing a document which "hereby releases Tf-1 from any and all claims arising from the beginning of the World to the day and date of this Release."

a. Can Tf-1 now obtain contribution from Tf-2 and Tf-3?

b. Suppose Tf.1 does not seek contribution, but P now sues Tf-2 and Tf-3 on the same claim. Do they have a defense against P? Do they have a contribution claim against Tf-1?

#5. Assume that in settling the first suit vs. Tf-1, P signs a document that "releases all claims against anyone in the World arising out of this occurrence."

a. P now sues Tf-2 and Tf-3 for the same event. What result?

b. Tf-1 sues Tf-2 and Tf-3 for contribution. What result?

- 520 - C. Synthesis on Contribution Law and Procedure

TAZEWELL OIL CO. v. UNITED VIRGINIA BANK 243 Va. 94, 413 S.E.2d 611 (1992)

JUSTICE LACY delivered the opinion of the Court: In these two cases, the execution by two lien creditors of their agreement to liquidate their security by seizing their debtor's accounts receivable and inventory has generated a number of legal issues. The primary issues involve one creditor's liability for conspiracy, the effect of releases with other tortfeasors on that creditor's liability and on its right to reduction of the recovery award by the amounts paid pursuant to the releases, and the trial court's treatment of compensatory and punitive damages. . . In 1981, Southside Oil Company, Inc. (Southside), a wholesale petroleum product distributor in South Boston, borrowed money from the South Boston branch office of United Virginia Bank (UVB) to buy and operate another distributor's business in South Boston. Tucker W. McLaughlin, an officer of Southside and its sole stockholder, dealt with Douglas V. Bowman, president of the UVB branch in South Boston. . . Southside acquired the capital stock of those corporations, and McLaughlin became an executive officer in each of them, but left their management to local personnel.. . . One of Southside's acquisitions was Tazewell Oil Company, Inc. (Tazewell). . . In September 1983, McLaughlin's corporations began to withdraw large sums of money from Tazewell to finance McLaughlin's unrelated business enterprises. These withdrawals caused McLaughlin's corporations to issue checks for which there were insufficient funds in their UVB bank accounts and to default in some of their principal and interest payments. Additionally, some of McLaughlin's corporations failed to pay their suppliers. As a consequence, UVB had to pay those suppliers large sums that it had guaranteed on its letters of credit issued to suppliers on those corporations' accounts. The corporations and McLaughlin were unable to reimburse UVB, thereby increasing their indebtednesses to UVB. . . . UVB continued to extend credit to McLaughlin's corporations, to accept partial payments of principal and interest, and to discuss McLaughlin's proposals to make deferred payments . . . Although Tazewell failed to keep a number of its payment promises, UVB did not repeat its demand for immediate payment of all of McLaughlin's corporate indebtednesses during their many contacts during this period. Tazewell, however, kept its interest payments current and made principal curtailments amounting to approximately $ 30,000 a month, thereby reducing its indebtedness to UVB from $ 1.1 million to $ 914,000 at the end of May 1985. Southside also owned and operated Cardinal Fuels, Inc. (Cardinal), another petroleum distributorship which operated in Buchanan County. In January 1983, Miners and Merchants Bank (M&M) in Grundy loaned Cardinal $ 250,000. This debt was evidenced by demand notes secured by Cardinal's accounts receivable. In the fall of 1984, M&M lost a substantial part of its security. This loss occurred for two reasons. First, Cardinal's manager resigned, became its competitor, and took a

- 521 - number of Cardinal's customers with him. As those customers' accounts were paid, there was no corresponding reduction in Cardinal's debt to M&M. Second, the accounts receivable of those customers who stayed with Cardinal were taken over by Tazewell upon its assumption of Cardinal's operation after its manager's departure. Many of these accounts were then commingled with the Tazewell accounts receivable. To replace M&M's loss of collateral, McLaughlin offered additional security, including a subordinate lien on Tazewell's accounts receivable and equipment. In January 1985, M&M's president, James G. Graham, called UVB, the first lien holder, apparently for further information. Graham spoke with Bowman in South Boston. Bowman's pencilled notes of their telephone conversation indicated that Cardinal owed M&M $ 215,000, that M&M had a security agreement on Cardinal's accounts receivable, and that Cardinal's manager had recently left and was operating a competing business. On February 8, 1985, M&M and McLaughlin entered into a written agreement in which McLaughlin agreed to "pledge" the accounts receivable and equipment of both Cardinal and Tazewell to secure payment of Cardinal's debt . . . Shortly after the February 8 agreement was signed, Bowman learned that Cardinal's indebtedness to M&M had been rescheduled to provide for monthly installment payments of $ 5,000, plus interest. On Friday, May 30, Bowman had his second telephone conversation with Graham in which Graham told Bowman that Raines was terminating its relationship with Tazewell to become one of its competitors. Graham sought to determine from Bowman the status of Tazewell's account with UVB. During one of their later telephone conversations that day, Bowman also learned that McLaughlin was negotiating the sale of Tazewell to Raines. Despite this change in Tazewell's situation, Graham told Bowman that M&M "had no idea of moving to try to protect [its] interest unless there was an agreement that could be reached between [M&M and UVB]." Because Tazewell's accounts receivable represented a substantial part of UVB's security for the payment of McLaughlin's corporations' indebtedness of over $ 900,000, these developments became of concern to Bowman. First, Bowman feared that Tazewell might file a petition for relief under Chapter 11 of the Bankruptcy Act that could delay collection of UVB's debt. Second, Bowman was concerned that Tazewell's "good" accounts receivable, due at the end of May 1985, would be paid shortly after June 1 without reducing Tazewell's debt, and no sales would be made to replace those accounts, which would result in the loss of a substantial part of UVB's security. In their telephone conversations that day, each banker, without elaboration, assured the other that he had given "notice" to permit a seizure of the collateral in Tazewell's possession. As it turned out, neither banker had given a notice that was sufficient. Bowman had sufficient information to indicate that Cardinal might be current in its installment payments of principal and interest to M&M through the end of May. Yet, without further inquiry, he accepted Graham's bare statement that Cardinal was in default in its repayment agreement and that "notice" had been given. Nor did Bowman question Graham's apparently inconsistent information that Cardinal's obligation was then a demand note of $ 185,000, rather than the installment obligation of February 8. On that Friday afternoon, Bowman and Graham agreed to a plan to liquidate their respective collateral by immediate seizure of Tazewell's accounts receivable and

- 522 - inventory. Additionally, UVB agreed that M&M's attorney, H.A. Street, would act for both M&M and UVB in filing the necessary proceedings to seize Tazewell's accounts receivable and inventory. . . . Accordingly, on Monday, June 3, 1985, Street filed a suit for M&M in the Circuit Court of Buchanan County against Cardinal, Tazewell, Grundy National Bank (Grundy) (Tazewell's depository), and the account debtors of Cardinal and Tazewell. As pertinent to this case, M&M sought: (1) to enjoin Cardinal and Tazewell from collecting their accounts receivable; (2) to require Cardinal's and Tazewell's debtors to pay their indebtednesses into court; and (3) to enjoin Grundy National Bank from honoring Tazewell's checks on its accounts with Grundy. Street also had deputy sheriffs serve "legal" notices on Tazewell's debtors not to pay Tazewell and on Grundy not to honor Tazewell's checks. On the same day and in the same court, Street filed a suit for UVB against Tazewell and Raines to enjoin Tazewell from disposing of any of its inventory covered by UVB's lien, and for alternative relief. Neither bill of complaint mentioned the May 31 agreement between M&M and UVB. Late Monday afternoon, Graham told McLaughlin that the banks were "going after the accounts receivable." The next morning, McLaughlin discovered that the suits had been filed and that the "legal" notices had been, or were being, served on Tazewell's customers and Grundy. As a result, Tazewell and Cardinal were "put out of business" because "they didn't have any cash, . . . any inventory . . . [or] any accounts receivable." Therefore, McLaughlin was compelled to sell Tazewell's inventory and rent its assets to Raines for sums substantially less than their value prior to the filing of the suits and the service of the notices. UVB and M&M filed other actions against McLaughlin's corporations and the endorsers and guarantors of their indebtednesses to those banks. In turn, those parties filed various actions against those banks and Grundy asserting a number of causes of action. All the cases were consolidated for trial by jury and a number of them were dismissed during the trial. At the conclusion of all the evidence, Grundy paid Tazewell and other parties $ 73,500 to release it from liability for its alleged wrongful failure to honor Tazewell's checks after receiving M&M's notice. Shortly thereafter, M&M paid Tazewell and other parties $ 400,000 to release it from a number of claims. The remaining cases went to the jury upon: (1) Tazewell's claim that UVB conspired with M&M to injure the trade and business of Tazewell; (2) Tazewell's claim that UVB had tortiously interfered with its February 8 agreement with M&M; and (3) UVB's claim that McLaughlin and some of his corporations owed it $ 358,748.71 for unpaid loans, as alleged in an action UVB had filed against them. The jury returned verdicts against UVB on all three issues, awarding compensatory damages of $ 300,000 each on the conspiracy and tortious interference counts and $ 300,000 punitive damages on the tortious interference count. The court denied UVB's post-trial pleas of release based on the Grundy and M&M settlements, entered judgment on the conspiracy verdict, trebled the damages to $ 900,000 as provided in Code § 18.2-500(a), and reduced that award by $ 473,500, the

- 523 - total of the settlement amounts. Also, the court awarded attorney's fees and costs to Tazewell's counsel as authorized by Code § 18.2-500(a). The court concluded that the evidence supported the verdicts for compensatory and punitive damages on the tortious interference issue. The court did not enter judgment on that claim, however, because "there was no evidence to support a combined compensatory verdict of $ 600,000 [and the] damages awarded on the tortious interference count, both compensatory and punitive, are included in the damages awarded under the conspiracy count." We awarded appeals to both UVB and Tazewell and consolidate them for consideration here. I. UVB'S APPEAL, RECORD NO. 910301 UVB contends that the judgment for damages against it should be set aside and judgment entered in its favor because Tazewell's release of M&M and Grundy also released UVB. Also UVB contends that the evidence was insufficient to support the verdicts. . . A. SETTLEMENTS OF OTHER CASES UVB asserts that Tazewell's settlements with M&M and Grundy do not meet the requirements of Code § 8.01-35.1, the covenant not to sue statute, and, therefore, are subject to the common-law rule that release of one tortfeasor releases the other tortfeasors. First, UVB argues that, as the statute applies only to the release of tort liability, it does not apply where both tort and contract liability are released, as in this case. We disagree. There is no requirement of separate documents for the release of contract and tort claims. Consolidation of them in a single document does not defeat an otherwise valid compliance with Code § 8.01-35.1 as to the tort claims. Next, UVB contends that Tazewell's promise, recited in the settlement document, not to appeal the trial court's ruling regarding its conspiracy count against Grundy was neither a release nor a covenant not to sue covered by Code § 8.01-35.1. We agree. But UVB offers no authority, and we find none, that supports its position that such an agreement is, nevertheless, a common-law release or common-law covenant not to sue and, thus, subject to the common-law rule. Finally, UVB argues that, although the releases "purported to be in conformity" with Code § 8.01-35.1, they were drafted to "harass and prohibit the court from implementing the requirements" of the section and constituted bad faith. The M&M release provides that only the $ 15,000 allocated to settlement of the conspiracy charge could be used to reduce the recoveries of the releasors against other parties. This restriction, UVB asserts, prevents the court from considering the amounts paid in settlement in the exercise of its duty under Code § 8.01-35.1 to determine "the amount for which judgment shall be entered." We do not regard this as an act of bad faith. Indeed, the statute contemplates that a court may have to choose between "the amount stipulated by the covenant or release, or in the amount of the consideration paid for it, whichever is the greater." Code § 8.01- 35.1(A)(1). Therefore, we hold that the court correctly denied UVB's pleas of release.

- 524 - B. CONSPIRACY CHARGE Next, we consider UVB's contention that the evidence was insufficient, as a matter of law, to sustain the jury's finding that UVB engaged in a conspiracy to injure Tazewell's business in violation of Code § 18.2-499(a). . . . UVB asserts that its motive was "simply to collect the debts that were owed to it" by Tazewell, and a finding that UVB's actions were undertaken to destroy Tazewell, thereby forestalling it from filing Chapter 11 bankruptcy proceedings, is "sheer speculation." . . . . Based on our review of the record, we cannot say that there was insufficient evidence, as a matter of law, to support a verdict for Tazewell on its conspiracy count. Factual findings of a jury confirmed by the trial judge will not be reversed on appeal unless there is no credible evidence to support them. There is credible evidence to support a finding that UVB acted in concert with M&M and agreed, associated, or combined for the purpose of willfully and maliciously damaging Tazewell in its trade or business. The record shows that UVB intended to forestall a chapter 11 filing and that its actions exhibited a willful disregard for Tazewell's rights. UVB's protestations that it was "merely attempting to collect its debts" ring hollow in light of the extensive and unusual actions it undertook in concert with M&M to eliminate any ability of Tazewell to continue operating or to file a reorganization plan under Chapter 11 by removing Tazewell's access to cash flow, inventory, or other financing. C. CONSOLIDATION OF CASES UVB argues that the trial court should not have consolidated all eight cases involving the three banks, McLaughlin, his corporations, and the accommodation parties because it was "unmanageable." Although some cases involved separate facts and claims, common facts arising out of the complicated relations between McLaughlin, his corporations, the accommodation parties, and the three banks over essentially the same period of time were integral to all cases. Most of the cases required testimony from McLaughlin, Bowman, and Graham to establish the course of dealing among these parties. The trial testimony of these three witnesses took substantial parts of six days and extended over 1,349 pages of the record. Other witnesses also would have been required to relate many of the same facts in each case. Under these circumstances, we find no abuse of the trial judge's discretion in consolidating these cases. See Commonwealth v. Pembroke Limestone Works, 145 Va. 476, 487, 134 S.E. 717, 720 (1926). . . . F. ATTORNEY'S FEES AND COSTS Code § 18.2-500(a) allows recovery for conspiracy of "the costs of suit, including a reasonable fee to plaintiff's counsel." The trial court awarded attorney's fees and costs against UVB in the sum of $ 472,000. Of this amount, $ 425,000 represented attorney's fees, expenses, and costs incurred during the trial, and $ 47,000 was for attorney's fees and costs incurred subsequent to the trial. In support of its motions for costs and attorney's fees, Tazewell submitted to the trial court almost 300 pages of contemporaneous time records detailing the activities for which fees were sought. Tazewell also submitted affidavits of its attorneys upon the

- 525 - reasonableness of the hourly rates charged and the accuracy of the time billed. UVB presented nothing to contradict the affidavits. The trial court determined that the time spent in preparing Tazewell's case against UVB for conspiracy would have been substantially the same whether additional defendants had been involved and whether additional, factually intertwined but legally distinct counts had been brought. UVB contends that the "award of costs and fees . . . should be set aside because the motion and supplemental motion and support affidavits are insufficient as a matter of law and the award is excessive." We do not agree. Where, as here, a statute authorizes recovery of attorney's fees and expenses, the fact finder is required to determine from the evidence the amount of the reasonable fees under the facts and circumstances of each particular case. Mullins v. Richlands National Bank, 241 Va. 447, 449, 403 S.E.2d 334, 335 (1991). "In determining a reasonable fee, the fact finder should consider such circumstances as the time consumed, the effort expended, the nature of the services rendered, and other attending circumstances." Id. While expert testimony ordinarily is necessary to assist the fact finder, such testimony is not required in every case. See id. In this case, expert testimony was not necessary because of the affidavits and detailed time records, which were wholly unrefuted by any evidence offered by UVB. Accordingly, we hold that the amount fixed by the trial court was amply supported by the evidence and we find no error in the trial court's allowance. G. POST-TRIAL DISCOVERY UVB complains that the court should have permitted post-trial discovery of the bases of the Grundy and M&M settlements. According to UVB, it had a right to take such discovery on the "threshold requirement under Code § 8.01-35.1 that the releases be given in good faith." UVB was furnished with a copy of the settlement agreements and received answers to post-trial interrogatories it filed regarding settlement negotiations. It has not indicated what additional evidence it expected to obtain in further discovery on the issue of good faith that it could not have obtained in a trial. Absent a showing of prejudice, under these circumstances, we find no abuse in the court's discretion to deny discovery. See Rakes v. Fulcher, 210 Va. 542, 546, 172 S.E.2d 751, 755 (1970). This ruling, however, is without prejudice to UVB's right to further discovery upon remand of the settlement issues discussed later in this opinion. II. TAZEWELL'S APPEAL, RECORD NO. 910299 In its appeal, Tazewell contends that the trial court erred in not entering judgment based on the full amount of compensatory and punitive damages contained in the jury's verdict, in fixing the prejudgment interest rate at 7%, and in reducing the award by the amount M&M and Grundy paid to others. A. COMPENSATORY AND PUNITIVE DAMAGES As we have stated, the jury found that UVB not only had conspired to injure Tazewell's business, but also had tortiously interfered with Tazewell's February 8 contract with M&M. The jury awarded compensatory damages of $ 300,000 on each of the conspiracy and tortious interference counts, and $ 300,000 punitive damages on the tortious interference count.

- 526 - The trial court entered judgment on the conspiracy count, trebled the damages to $ 900,000, and reduced that award by the total of the settlement amounts. The trial court, although concluding that the evidence supported the verdicts on the two counts, refused to enter judgment on the tortious interference claim, concluding there was no evidence to support a combined verdict of $ 600,000 for compensatory damages. The trial court ruled that once "the jury concluded that the evidence justified a verdict in favor of Tazewell Oil on the conspiracy count, the tortious interference count was consumed," and to allow damages for that tort would result in a double recovery. Contending that the trial court correctly ruled that the evidence was sufficient to support the jury's finding of UVB's liability for tortious interference, Tazewell argues that the trial court erred "by ignoring the jury's verdict and speculating that the jury meant to make only a single compensatory damage award to Tazewell in the amount of $ 300,000." We will agree with Tazewell and assume without deciding that the evidence was sufficient to support a finding of liability against UVB for tortious interference. We disagree with Tazewell, however, that the trial court erred in refusing to allow a double recovery. In setting damages of $ 300,000 on both the conspiracy count and the tortious interference count, the jury obviously relied on the testimony of James Wayne Childress who stated that McLaughlin had offered in May 1985 to sell Tazewell to him for $ 300,000. There was no evidence to permit the jury to distinguish between the damages caused by the conspiracy and the tortious interference because the claim, under both counts, was that Tazewell had been destroyed as a going concern. Given the discretion vested in the trial judge to supervise jury awards of damages, we cannot say that the trial court abused its discretion in limiting Tazewell's recovery in this case and in refusing to enter judgment for either compensatory or punitive damages on the tortious interference count. . . . C. REDUCTION OF VERDICTS BY SETTLEMENT AMOUNTS The trial court reduced Tazewell's recovery by $ 473,500, the full amount M&M and Grundy paid for the releases. Tazewell contends that the court erred in doing so because the settlements included claims of other parties against Grundy and M&M, as well as claims of Tazewell against those banks other than its claims for conspiracy and tortious interference. Code § 8.01-35.1(A)(1) provides in pertinent part that: any amount recovered against the other tortfeasors, or any one of them, shall be reduced by the amount stipulated in the covenant or release or, in the amount of the consideration paid for it, whichever is greater. In this case, the only stipulation was in M&M's release, which provided that only $15,000 of the consideration paid was for Tazewell's claims for conspiracy damages.23 The trial court reasoned, and UVB urges here, that the statute "makes no provision for allocating the consideration between causes of action, or tort feasors." As the entire

23 The trial court had struck Tazewell's claims against Grundy for conspiracy and punitive damages prior to the settlement with Grundy. Consequently, the settlement states that none of the proceeds were being paid for release of the conspiracy claims against Grundy. "All such claims have been asserted in pending litigation and will be dismissed with prejudice on the merits."

- 527 - amount of consideration paid for the releases in this case, $ 473,500, exceeds the stipulated amount, it operates as a credit against the subsequent recovery. We disagree. In applying this provision of § 8.01-35.1, the trial court must identify the amount of consideration paid by a tortfeasor for a release. In determining this amount, the court must look at the injury or damage covered by the release and, if more than a single injury, allocate, if possible, the appropriate amount of compensation for each injury. The releases in this case involved multiple claims and multiple parties who are closely associated. Nevertheless, the record does not reveal any attempt by the trial court to ascertain whether the amounts paid were based on the single injury of destruction of Tazewell, or whether some of the consideration covered releases for a different injury or injuries suffered by Tazewell, or suffered by other parties. Without such evidence or analysis, the trial court could not determine whether the amount stipulated in the release to be credited against recovery was more or less than the amount actually paid in consideration of the release for the conspiracy claims. Consequently, we will remand the case for proceedings necessary to make the determinations required by Code § 8.01- 35.1. III. CONCLUSION For the reasons assigned, we will affirm the judgment of the trial court awarding damages, attorney's fees, and costs on the conspiracy count; reverse the judgment insofar as it reduced the judgment by the full amounts of the sums paid in settlement; and remand the case for further proceedings consistent with this opinion.

- 528 -

The Problem of Verdicts and Code §8.01-35.1

Where there are overlapping claims in a prior settlement and the current lawsuit, it is sometimes difficult to sort out what portion of the prior settlement, and what portion of the present judgment (if the result of a “general” jury verdict), relate to which claims. The Supreme Court has stated that while it "may be difficult to ascertain which elements of ... claimed damages were included by the jury in its verdict or the amount awarded for any particular element of damage," nevertheless, if a prior release was given "to one of two or more persons liable in tort for the same injury, or the same property damage," then the defendant in a later action is entitled to have the opportunity to show that it was due a credit for any sums included in the prior settlement that are duplicative of the damages awarded by the jury in the later case. Acordia of Virginia Ins. Agency v. Genito Glenn, L.P., 263 Va. 377, 560 S.E.2d 246 (2002), citing Code § 8.01-35.1(A). Code § 8.01-35.1(A)(1) specifies that "any amount recovered against the other tort- feasors or any one of them shall be reduced by any amount stipulated by the covenant or the release, or in the amount of the consideration paid for it, whichever is the greater." However, the Court noted that Code § 8.01-35.1(A)(1) also provides that such a release "shall not be admitted into evidence in the trial of the matter but shall be considered by the court in determining the amount for which judgment shall be entered." Thus, a defendant would not be entitled to have the jury consider evidence regarding the prior settlement. "Instead, the fact and amount of the settlement were a matter for the trial court to consider when determining the amount of judgment to be entered." Acordia, supra. Accordingly, in one case the Court concluded that the circuit court erred in failing to consider the application of Code § 8.01-35.1 and remanded for further proceedings. The Court cautioned that in determining the amount of consideration paid by a tortfeasor for a release, the trial court "must look at the injury or damage covered by the release and, if more than a single injury, allocate, if possible, the appropriate amount of compensation for each injury." The trial court must also ascertain whether any of the consideration paid for the release and settlement of the prior case covered injuries suffered by other parties. In short, the court must decide whether the release in the prior case was "given . . . to one of two or more persons liable in tort for the same injury, or the same property damage," thereby duplicating any element of damage awarded to the plaintiff in the later litigated case. Acordia of Virginia Ins. Agency v. Genito Glenn, L.P., 263 Va. 377, 560 S.E.2d 246 (2002), citing Code § 8.01-35.1(A).

- 529 -

Notes on Suing and Settling

Covenants Not to Sue: see generally "The Covenant Not to Sue: Virginia's Effort to Bury the Common Law Rule Regarding the Release of Joint Tortfeasors," 14 U. Rich. L. Rev. 809 (1980). Suing Joint Obligors. A plaintiff may sue any one or more among joint obligors under a contract. §8.01-30; § 8.01-5; Reed & Rice Co. v. Wood, 138 Va. 187, 120 S.E. 874 (1924). If the claim is barred as to one or more obligor, it may be pressed against the others. § 8.01¬442. Suing Joint Tortfeasors. A plaintiff may sue any one or more joint tortfeasor. Code § 8.01¬443. A judgment against one tortfeasor does not release others. Consult substantive tort and agency law in Virginia to determine the standard for conduct sufficiently joint or proximately causing indivisible injury so as to make the actors joint tortfeasors in law. Generally, successive tortfeasors are not joint tortfeasors in Virginia law. As between joint tortfeasors, plaintiff's judgment is indivisible, so that one tortfeasor may be required to pay the full amount. § 8.01-443. See Harleysville Mutual Ins. v. Nationwide Mutual Ins., 789 F.2d 272 (4th Cir. 1986). Contractual Indemnity. Note that Code § 8.01-35.1 governs only claims for contribution between tort feasors, a relationship created in law by the commission of the tort. The statute does not alter indemnity rights which arise from a contract between the parties. See Whittle v. Timesavers, Inc., 572 F.Supp. 584 (W.D. Va. 1983). Note that Tazewell Oil indicates that a party may settle contract and tort claims in a single instrument, and remain protected by ¬35.1 as to the tort claims. Intentional Torts and Other Turpitude. The focus of the contribution section is on joint negligence. Thus, a party who otherwise would be entitled to contribution will have no contribution right where the joint liability arose out of an act involving moral turpitude or a voluntary tort. Hudgins v. Jones, 205 Va. 495, 138 S.E.2d 16 (1964).

- 530 -

Chapter 10 Medical Malpractice Basics

A. Introduction ...... 531 Bulala v. Boyd...... 531 B. Medical Malpractice Review Panels ...... 542 C. Settlement of Medical Malpractice Claims: Themes and Variations ...... 543 Fairfax Hospital System v. McCarty...... 543 Fairfax Hospital System v. Nevitt...... 547 NOTES on Medical Malpractice...... 555

Concern about the increase in medical costs generally and the number of medical malpractice actions in particular led to the enactment in 1976 of provisions now codified as Chapter 21.1 of Title 8.01 (the Act). Article 1, §§ 8.01-581.1 to 8.01-581.12, establishes medical malpractice panels which represent a major change from prior law. Section 8.01-581.12 provides a corollary mechanism for arbitration of medical malpractice claims. Code §§ 8.01-581.13 to 8.01-581.20, contain miscellaneous provisions, generally relating to privileged communications, immunities, and limitations on recovery applicable to certain health care providers. The standard for expert testimony on malpractice is also specified along with a preliminary limit of two expert witnesses per discipline.

A. Introduction BULALA v. BOYD 239 Va. 218, 389 S.E.2d 670 (1990)

JUSTICE RUSSELL delivered Parts I, II, III, IV, VII, and VIII of the opinion of the Court. Pursuant to Rule 5:42, the United States Court of Appeals for the Fourth Circuit, on July 28, 1989, certified to this Court six questions of Virginia law, which we accepted by order entered September 25, 1989. The certified questions are stated as follows: 1. Where there are two or more plaintiffs entitled to recover damages arising from the same act or acts of medical malpractice, does § 8.01-581.15 apply individually to each plaintiff or overall to two or more such plaintiffs? If the statute does apply to all or any combination of plaintiffs' claims, how is it to be apportioned among them? 2. Does § 8.01-581.15 apply to damages for the infliction of emotional distress arising from some act or acts of medical malpractice?

- 531 - 3. Does § 8.01-581.15 apply to an award of punitive damages for an act or acts of medical malpractice? 4. Does Virginia law allow recovery for the loss of enjoyment of life when death results from an act or acts of medical malpractice? 5. Does Virginia law allow Veronica Boyd to recover damages for her lost earning capacity based upon the evidence presented in this case? 6. What is the effect, under Va. Code Ann. §§ 8.01-21, 8.01-25, and 8.01- 56, of Veronica Boyd's death after verdict but before judgment in this case? The facts, which are substantially undisputed, are [that Dr. Bulala stayed home resting when his patient entered the hospital in labor]. About 7:45 a.m., the nurses discovered that the fetal heart rate had dropped far below normal, indicating an acute oxygen insufficiency. The danger to the unborn child had probably existed for an hour, but had not been discovered because of inadequate monitoring. About 8:00 a.m., a nurse called Dr. Bulala at home, and informed him of the complications. The nurses immediately took Mrs. Boyd to the delivery room, where she gave birth to a child, Veronica Lynn Boyd. As a result of the asphyxiation, Veronica suffered grave and permanent birth defects. Dr. Bulala arrived after the birth. Veronica lived only from January 31, 1982 until March 10, 1985. She died after the verdicts were returned in the trial court, but before judgment was entered. Uncontroverted expert testimony established that Veronica was afflicted with cerebral palsy, would never be able to walk, would never mentally develop beyond the level of a one-year-old child, and, if she had survived, would have required institutional care all her life. Helen C. Boyd, Roger E. Boyd, her husband, and Veronica, by her parents and next friends, brought this civil action. . . The mother's claim was based upon medical malpractice, alleging bodily injury including perineal tearing due to the defendant's failure to perform an episiotomy. In addition, Mrs. Boyd claimed damages for mental anguish arising from the birth of her profoundly impaired child. The father claimed damages arising from emotional distress. The child's claim was based upon her personal injuries. Veronica contended that she, as well as her mother, was Dr. Bulala's patient and that her claim also arose out of medical malpractice. The three plaintiffs did not claim separate awards of damages. Rather, their complaint concluded with an ad damnum clause demanding $ 6,800,000 compensatory damages and $ 800,000 punitive damages for the three plaintiffs jointly. The case was tried by jury over a period of six days. On January 21, 1985, the jury returned the following separate verdicts against Dr. Bulala:

(1) For Veronica Boyd – Compensatory damages - $ 1,850,000 (2) For Veronica Boyd -- Punitive damages - 1,000,000 (3) For Helen Boyd -- Compensatory damages - 1,575,000 (4) For Helen Boyd -- Punitive damages - 1,000,000 (5) For Roger Boyd -- Compensatory damages - 1,175,000

- 532 - (6) For Helen and Roger Boyd (medical expenses until Veronica reaches 18 years of age) - 1,700,000 ______Total verdicts $ 8,300,000 At the conclusion of the trial, Dr. Bulala moved the court, among other things, to reduce the verdicts to $ 750,000, the maximum amount recoverable under the medical malpractice cap contained in Code § 8.01-581.15. [Now at almost exactly $1,000,000. Ed.] Dr. Bulala moved the court to amend the judgment pursuant to Fed. R. Civ. P. 59(e), on the ground that the plaintiffs had, in 1982, brought a medical malpractice action in the Circuit Court of Tazewell County, Virginia, on the same facts, against Dr. Bulala and Humedicenter, Inc., had settled with Humedicenter for $ 650,000 and had nonsuited Dr. Bulala. The district court granted the motion, crediting the $ 650,000 against the four verdicts for compensatory damages in the same proportion each verdict bore to the sum of the four. Boyd v. Bulala, 678 F. Supp. 612 (W.D. Va. 1988). . . . Dr. Bulala's appeal to the United States Court of Appeals for the Fourth Circuit raised, among others, the question of the constitutionality of the medical malpractice cap contained in Code § 8.01-581.15. During the pendency of the appeal, however, this Court, in Etheridge v. Medical Center Hospitals, 237 Va. 87, 376 S.E.2d 525 (1989), upheld the constitutionality of the Medical Malpractice Act. The United States Court of Appeals concurred with this Court's conclusion that the medical malpractice cap offends no provision of the Federal Constitution, followed this Court's determination in Etheridge that the cap offends no provision of the Virginia Constitution, decided certain issues, and certified to this Court the questions of law stated above. . . IV. THE MEDICAL MALPRACTICE CAP The General Assembly enacted the Virginia Medical Malpractice Act (the Act) in 1976. Acts 1976, c. 611. The cap on recovery was contained in former Code § 8-654.8 (now § 8.01-581.15) in the following language: In any verdict returned against a health care provider in an action for malpractice where the act or acts of malpractice occurred on or after April one, nineteen hundred seventy-seven which is tried by a jury or in any judgment entered against a health care provider in such an action which is tried without a jury, the total amount recoverable for any injury to, or death of, a patient shall not exceed seven hundred fifty thousand dollars. That provision applied at all times pertinent to this case. [T]he General Assembly attached a preamble to the Act which sets forth an unusually explicit statement of the legislative purpose: Whereas, the General Assembly has determined that it is becoming increasingly difficult for health care providers of the Commonwealth to obtain medical malpractice insurance with limits at affordable rates in excess of $ 750,000; and Whereas, the difficulty, cost and potential unavailability of such insurance has caused health care providers to cease providing services or to retire prematurely and has become a substantial impairment to health care

- 533 - providers entering into practice in the Commonwealth and reduces or will tend to reduce the number of young people interested in or willing to enter health care careers; and Whereas, these factors constitute a significant problem adversely affecting the public health, safety and welfare which necessitates the imposition of a limitation on the liability of health care providers in tort actions commonly referred to as medical malpractice cases. . . . Acts 1976, c. 611. Thus, the legislative judgment was that the cap on recovery contained in the Act was the appropriate means of addressing the problem described in the preamble. Etheridge, 237 Va. at 94, 376 S.E.2d at 528. For that reason, this Court decided, in Etheridge, that a single limit of $ 750,000 applied to an indivisible injury to a plaintiff, even though it was caused by the concurring negligence of two or more defendants. Id. at 105, 376 S.E.2d at 535. Any other construction would defeat the ability of the Act to "remedy the mischief at which it is directed." The same reasoning governs this case. The pertinent statutory language is, "[i]n any verdict returned . . . in an action for malpractice . . . the total amount recoverable for any injury to, or death of, a patient shall not exceed seven hundred fifty thousand dollars." Code § 8.01-581.15. Applying the foregoing principles to that language, we construe it to mean that in a medical malpractice action, the total damages recoverable for injury to a "patient" are limited to the statutory amount, regardless of the number of legal theories upon which the claims are based. It is as true in this case as it was in Etheridge, that a different construction would defeat the ability of the Act to "remedy the mischief at which it is directed."

V. THE PRESENT CLAIMS The final judgment in the district court was based on the claims of the mother for compensatory and punitive damages; the claims of the child for compensatory and punitive damages; the claim of the father for compensatory damages; and the joint claim of the parents for medical expenses until the child reached 18 years of age. We now relate our determination on the existence of a single cap to the present claims, focusing on the meaning of "patient," as defined by the Act. Code § 8.01-581.15 provides that the section shall be interpreted by applying the definitions found in Code § 8.01-581.1. The latter section, as pertinent, defines "Patient" as "any natural person who receives or should have received health care from a licensed health care provider." § 8.01-581.1(3). A. Compensatory Damages As we have stated, the mother had a physician-patient relationship with Dr. Bulala. Clearly, she was a "patient" within the meaning of the Act and entitled to the benefit of one statutory cap for her compensatory damage claim. The elements of that claim encompass recovery for her own physical injury and the effect on her health according to its degree and probable duration. Her injury was the perineal tearing due to defendant's failure to perform an episiotomy. Among the other elements of the mother's claim associated with her physical injury are: recovery for

- 534 - physical pain, mental suffering, and medical expenses connected with her own physical injury. Additionally, the mother, as a part of her claim, would be entitled to recover for mental suffering resulting from the birth of a defective child. See Modaber v. Kelley, 232 Va. 60, 66, 348 S.E.2d 233, 236-37 (1986) (injury to fetus constitutes injury to mother allowing recovery for mental suffering associated with stillbirth). We turn to the child's compensatory damage claim. In Kalafut v. Gruver, 239 Va. 278, 389 S.E.2d 681 (1990), decided today, we held that a "tortfeasor who causes harm to an unborn child is subject to liability to the child, or to the child's estate, for the harm to the child, if the child is born alive." Id. at 283-84, 389 S.E.2d at 684. We drew the line between nonliability and liability for prenatal injury at the moment of live birth of the child, when the child became a "person." Therefore, the child in this case had a claim against the defendant and would be entitled to the benefit of a separate statutory cap, provided she was defendant's "patient" within the meaning of the Act. As we have noted, the Act defines "patient" as "any natural person who receives or should have received health care" from the health care provider. Accordingly, we hold that, at the moment of live birth, the child became the patient of the defendant obstetrician-gynecologist because she was a "natural person" who, at the instant of birth, received or "should have received" health care from defendant. Certainly, at the moment of live birth, the infant will not be deemed abandoned, under the care of no one. So it cannot logically be said that the child is not a "patient" and thus not covered by the Act. This conclusion is compatible with the responsibilities, roles, and relationship in the birthing process between the obstetrician on the one hand and the pediatrician on the other. The practice of obstetrics is defined as "a branch of medical science that deals with birth and with its antecedents and sequels." Webster's Third New International Dictionary 1559 (1981). The practice of pediatrics is defined as "a branch of medicine that deals with the child, its development, care, and diseases." Id. at 1664. Therefore, as we construe the Act, at the moment of live birth, and until the pediatrician assumes responsibility for the care of the newborn, the infant is the obstetrician's "patient." Hence, a separate statutory cap for compensatory damages applies to the child's case. And, the child's damage claim is comprised of the usual elements of damage, if established by the required proof, appropriate to any infant's personal injury action. Turning to the claim, if any, the father may have for emotional distress and the parents' joint claim for medical expenses, we conclude that both of those claims fall within the child's statutory cap, under the circumstances of this case. In Speet v. Bacaj, 237 Va. 290, 298, 377 S.E.2d 397, 401 (1989), we said that a parent's claim for emotional distress as the result of injury to the child is "wholly derivative" of the child's claim. Here, the father, of course, was not the defendant's "patient," within the meaning of the Act. Nevertheless, the emotional distress claim is covered by the Act because it is wholly derivative of the child's claim. However, the total damages recoverable for injury to the child, including derivative claims, are limited to the statutory amount. That amount has been exhausted by the child's claim in this case, leaving nothing to allocate to the father's claim. In Norfolk Southern Ry. v. Fincham, 213 Va. 122, 128, 189 S.E.2d 380, 384 (1972), we said that a parent's "cause of action for medical and incidental expenses was a derivative action." Thus, the same rationale applies to the parents' claim for medical

- 535 - expenses that we applied to the father's claim for emotional distress. Because the expense claim is derivative, the total damages recoverable for the child's injury, including this derivative claim, is limited to the statutory amount, which has been exhausted. B. Punitive Damages Under the facts and circumstances of this case, there can be no amount recovered for punitive damages. The plain meaning of the statute fixes the "total" amount recoverable at the statutory cap. Application of the $ 750,000 cap serves, on the present facts, to extinguish the awards of punitive damages. VI. APPORTIONMENT The foregoing discussion provides answers to the first three certified questions, with the exception of the issue of apportionment. The mother's $ 750,000 cap limits her total recovery to that amount. Likewise, the child's $ 750,000 cap limits her total recovery to that amount. These amounts should be reduced equally by the district court's $ 650,000 credit in the amount of $ 325,000 each. Thus, the mother and the child each are entitled to a judgment in the principal amount of $ 425,000. It follows from what we already have said that so much of the judgment which allows recovery for punitive damages, for the father's compensatory damage claim, and for the parents' joint medical expense claim, should be annulled.

VII. JURY INSTRUCTIONS The district court charged the jury that, if it found for Veronica Boyd, it might consider any of the following elements of damages if caused by the defendant's negligence: (1) any bodily injuries she sustained and their effect on her health, according to the degree and probable duration of those bodily injuries; (2) any physical pain and mental anguish she suffered in the past, and any that she might reasonably be expected to suffer in the future; (3) any disfigurement or deformity, and any associated humiliation or embarrassment; (4) any inconvenience caused in the past and any that will probably be caused in the future; (5) the loss of enjoyment of life; (6) any medical expenses that she may be reasonably expected to incur in the future, after she reaches the age of eighteen; (7) any loss of income and lessening of earning capacity, or either, that she may reasonably be expected to sustain in the future, after she reaches the age of eighteen years. (Emphasis added.) The defendant objected to the italicized portions of the charge and the fourth and fifth certified questions involve their propriety.

- 536 - A. Loss of Enjoyment of Life We have not recognized "loss of enjoyment of life" as a separately compensable element of damages in personal injury cases. Whether the term applies to a plaintiff's cognitive anguish at the loss of pleasures he formerly enjoyed, or whether it applies to the non-cognitive plight of a plaintiff like Veronica, deprived of the ability to progress to the enjoyment of life's pleasures, the term is duplicative of other elements contained in the damage instruction. We agree with the views expressed by the Court of Appeals of New York in the recent case of McDougald v. Garber, 73 N.Y.2d 246, 536 N.E.2d 372 (1989). There, Chief Judge Wachtler observed that the term "suffering" can readily be understood by juries to encompass the mental anguish resulting from the loss of enjoyment of life. Id. at 256-57, 536 N.E.2d at 376-77. The opinion concludes: Thus, we are not persuaded that any salutary purpose would be served by having the jury make separate awards for pain and suffering and loss of enjoyment of life. We are confident, furthermore, that the trial advocate's art is a sufficient guarantee that none of the plaintiff's losses will be ignored by the jury. Id. at 257, 536 N.E.2d at 377. B. Loss of Earning Capacity The jury instruction covering damages for "any loss of income and lessening of earning capacity, or either," was based upon evidence, admitted over the defendant's objection, by an economist who ascertained the median income for women in metropolitan areas in Virginia. He multiplied that income by the number of years in a normal work life expectancy, based on national averages, and discounted the product by factors based upon mortality, age, race, and sex. The burden is upon a plaintiff to prove the elements of damages with "reasonable certainty." Gwaltney v. Reed, 196 Va. 505, 507, 84 S.E.2d 501, 502 (1954). Although "mathematical precision" is not required, the plaintiff must "furnish evidence of sufficient facts or circumstances to permit at least an intelligent and probable estimate" of damages. Id. at 507-08, 84 S.E.2d at 502. Estimates of damages based entirely upon statistics and assumptions are too remote and speculative to meet that test. In order to form a reliable basis for a calculation of lost future income or loss of earning capacity, such evidence must be grounded upon facts specific to the individual whose loss is being calculated. See Cassady v. Martin, 220 Va. 1093, 1100, 266 S.E.2d 104, 108 (1980). In a personal injury action, a plaintiff is not precluded from recovering damages for lost future earnings or for diminution of earning capacity by reason of his infancy. See Moses v. Akers, 203 Va. 130, 132, 122 S.E.2d 864, 865-66 (1961); Watson v. Daniel, 165 Va. 564, 573, 183 S.E. 183, 187 (1936). But we have never held that statistical averages alone can form a sufficient evidentiary foundation for such damages. In order to carry his burden of proof, an infant plaintiff, like any other plaintiff, must "furnish evidence of sufficient facts or circumstances" to enable the jury to make "an intelligent and probable estimate" of damages, Gwaltney, 196 Va. at 507-08, 84 S.E.2d at 502. Such evidence must relate to facts and circumstances personal to the plaintiff as an individual, not merely to his membership in a statistical class.

- 537 - Undoubtedly, such an evidentiary standard may confront a plaintiff having no work history and no prospect of future earning ability with an impossible burden, but we think that result preferable to the unwarranted burden-shifting that occurs when future earnings are projected solely on the basis of statistics. Submission of the lost-earnings issue to the jury, in the circumstances of the present case, confronts the defendant with an unfair and improper burden of refutation. The evidence indulges, in the plaintiff's favor, the assumptions that if Veronica had been born a healthy, normal child, she would have lived a normal life span, would have been motivated to acquire a reasonable education, would have been motivated to acquire necessary work skills, would have been motivated to work all her life, and would have had the opportunity to do so without hindrance by health, economic, or other factors. The evidence assumes that Veronica would have been spared most of life's hazards. Because the burden is upon the plaintiff, those assumptions are impermissible. The defendant cannot refute them. Statistical averages are too remote from the plaintiff's personal situation to "permit an intelligent and probable estimate" of her damages as required under Gwaltney. We conclude that Virginia law does not permit recovery for "loss of enjoyment of life" as a separate element of damages, and that Virginia law does not permit Veronica Boyd to recover damages for her lost earning capacity based upon the evidence presented in this case. These holdings provide answers to the fourth and fifth certified questions. VIII. DEATH OF PLAINTIFF AFTER VERDICT Code § 8.01-21 provides, in pertinent part, "[w]hen a party dies, . . . if such fact occurs after verdict, judgment may be entered as if it had not occurred." Code § 8.01-25 provides that a cause of action survives the plaintiff's death, but if the action was for personal injury, and the plaintiff dies as a result of that injury with a timely personal injury action pending, "the action shall be amended in accordance with the provisions of § 8.01-56." Code § 8.01-56 provides, in pertinent part: when a person who has brought an action for personal injury dies pending the action, such action may be revived in the name of his personal representative. If death resulted from the injury for which the action was originally brought, a motion for judgment and other pleadings shall be amended so as to conform to an action under [the wrongful death statute], and the case proceeded with as if the action had been brought under such section. The defendant contends that §§ 8.01-25 and -56 mandate a conversion of Veronica Boyd's personal injury action into an action for wrongful death, necessitating a new trial, because her personal injury action was still "pending" at the time of her death. The United States District Court overruled the defendant's motion for a new trial, holding that the defendant's argument unnecessarily presupposes a conflict between § 8.01-21, on one hand, and §§ -25 and -56, on the other. Boyd v. Bulala, 647 F. Supp. 781, 795 (W.D. Va. 1986). We agree with the district court's analysis. "The clear purpose of § 8.01-21 is to eliminate the wastefulness of retrying an action which has been completely litigated." Id. That section applies when, as in this case, a party's death does not occur until after verdict. Codifying a salutary common-law rule, Code § 8.01-21 gives the court the option, in that situation, of proceeding to final judgment as if death had not occurred.

- 538 - Code §§ 8.01-25 and -56 are not in conflict with § 8.01-21. They were enacted to extend the application of § 8.01-50, the wrongful death statute, to those situations not covered by the original Lord Campbell's Act, in which a plaintiff who has filed an action for personal injuries, dies of those injuries before a verdict is returned. It was unnecessary at common law to amend, revive, or convert the action if the party survived the return of a verdict, Jackson v. Wickham, 112 Va. 128, 132, 70 S.E. 539, 540 (1911), and it is equally unnecessary under the present statutory scheme. We conclude that Code § 8.01-21 authorizes the entry of final judgment in the circumstances of this case. This holding provides an answer to the sixth certified question. Accordingly, the first and sixth certified questions are answered as hereinabove set forth, the second and third certified questions are answered in the affirmative, and the fourth and fifth certified questions are answered in the negative. JUSTICE RUSSELL, dissenting in part. I cannot agree with the reasoning contained in Parts V and VI of the Court's opinion. The majority impliedly recognizes that in order to become liable for personal injuries to another, a defendant must have caused injuries to a "person." Further, to come within the Medical Malpractice Act, a health care provider's negligence must have caused "injury to, or death of, a patient." Code § 8.01-581.15 (emphasis added). Therefore, in order to arrive at its conclusion, the majority must find that Veronica Boyd was both a "person" and a "patient" before she was born. That is a particularly difficult feat on the facts of this case. The evidence demonstrated that all of Veronica's injuries resulted from Dr. Bulala's negligence during the time preceding the child's delivery. He is not charged with any acts or omissions which caused injury to the child either during the actual delivery, or thereafter. Veronica was born "blue and limp," and suffering from severe asphyxiation as a result of oxygen deprivation before delivery. In Lawrence v. Craven Tire Co., 210 Va. 138, 140, 169 S.E.2d 440, 441 (1969), we said: "We are unwilling to hold that a child en ventre sa mere can maintain a common law action for personal injuries." We quoted with approval foreign authority which said: "We adhere to the rule that an unborn child is a part of the mother until birth and, as such, has no juridical existence." Id. at 142, 169 S.E.2d at 442 (emphasis added) (citation omitted). In Modaber v. Kelley, 232 Va. 60, 348 S.E.2d 233 (1986), we were even more explicit. "In Virginia, the law is established that an unborn child is not a 'person' within the meaning of our wrongful death statute." Id. at 66, 348 S.E.2d at 236. "Furthermore, we have adopted the view in tort litigation that an unborn child is a part of the mother until birth." (Emphasis added.) Id., 348 S.E.2d at 236-37. In light of the majority's opinion, it might be supposed that we had abandoned that view, were it not for Kalafut v. Gruver, 239 Va. 278, 389 S.E.2d 681 (decided today). There, we adopted the rule that a child born alive may maintain an action for injuries sustained in utero, but we carefully pointed out that "the rule we adopt today has no impact on the precedential value of Lawrence or Modaber." Id. at 284, 389 S.E.2d at 684. Further, we reiterated our view that "a fetus is not a 'person.'" Id. at 281, 389 S.E.2d at 685.

- 539 - Thus, if a child born alive has a cause of action for personal injuries sustained in utero, of what does its cause of action consist? In Kalafut, we were not required to answer that question, but we must do so here in order to determine the effect of the medical malpractice cap. Because, as the majority acknowledges in Part V(A), the child had no existence as a "person" when the injury occurred, the answer can only be that the child, after birth, has a cause of action for the injury sustained by the mother's body, of which it was a part, resulting from the defendant's negligence.

- 540 - Further, the mother was the obstetrician's only "patient" at the time of his malpractice, because the Act defines a "patient" as a "natural person." Code § 8.01- 581.1(3). At the time the tort was committed, Helen Boyd was the only "natural person" under the care and treatment of Dr. Bulala. It follows that although the child, after her birth, had a right to maintain an action in her own name, Kalafut, 239 Va. at 286, 389 S.E.2d at 685, the child's cause of action was entirely derivative of her mother's claim. The father's claim was equally derivative for the same reason. In the absence of Dr. Bulala's acts of malpractice committed against his patient, Helen Boyd, neither Veronica nor her father, Roger Boyd, would have had a cause of action. The pertinent statutory language is "[i]n any verdict returned . . . in an action for malpractice . . . the total amount recoverable for any injury to, or death of, a patient shall not exceed seven hundred fifty thousand dollars." Code § 8.01-581.15 (1977 Repl. Vol.). All elements of damage claimed by Veronica, Roger, and Helen Boyd, individually and jointly, flow from a single "injury to . . . a patient," Dr. Bulala's neglect of Helen Boyd. See Code § 8.01-581.15; Etheridge v. Medical Center Hospitals, 237 Va. 87, 105, 376 S.E.2d 525, 535 (1989). Therefore, in my view, Code § 8.01-581.15 limits the "total recovery" to $ 750,000. Consequently, I disagree with the apportionment formula fashioned in Part VI of the majority's opinion. JUSTICE WHITING, dissenting in part [omitted].

- 541 - B. Overview: Medical Malpractice Review Panels

If a malpractice review panel is requested by a party to a medical malpractice action within 30 days after it is served, the Chief Justice appoints a panel consisting of two impartial health care provider members from a list provided by the State Board of Medicine, one of whom, unless impractical, will be of the medical specialty involved in the claim; two impartial licensed and practicing attorneys from a list supplied by the Virginia State Bar; and one sitting or one retired circuit court judge who serves as chairman of the panel. The chairman votes only if there is a tie vote by the other panel members. The General Assembly has provided that the presiding judge ``need not'' attend or participate in the deliberations of the panel. If a claim arising out of the same incident is asserted against more than one health care provider and a request for a panel is made by any party, a single panel reviews the matter. Hearing Procedure. If the claimant or health care provider requests a hearing before the review panel, the panel must conduct a hearing pursuant to the Act after adequate notice to the parties. If there is no hearing, the evidence to be considered shall be promptly submitted by the respective parties in written form only. All parties have full access to the material submitted. If a hearing is held, all members of the panel must be present unless waived by both sides. Preliminary motions may be made but no demurrers, motions to dismiss, or motions to strike are permitted. While strict rules of evidence need not be observed, it appears that an opinion should not be based entirely on hearsay evidence. Panel Opinions. Within 30 days after receiving all the evidence, the panel renders one of the following opinions: (1) the evidence does not support a conclusion that the health care provider failed to comply with the appropriate standard of care; (2) the evidence supports a conclusion that the provider failed to comply with the appropriate standard of care and such failure is a proximate cause of the alleged damages; (3) the evidence supports a conclusion that the provider failed to comply with the appropriate standard of care and that such failure is not a proximate cause of the alleged damages; or (4) the evidence indicates that there is a material issue of fact, not requiring an expert opinion, bearing on liability for consideration by a court or jury. If opinion number (2) is rendered, the panel may determine whether the claimant suffered any disability or impairment and the degree and extent thereof. The written opinion and any dissent are mailed to the parties within five days after rendition. Section 8.01-581.7:1 provides that, unless otherwise agreed by the parties, the panel will render an opinion within six months from the designation of the panel, although the chairman may extend the time limit one time for ninety days, upon showing of extraordinary circumstances. If the opinion is not rendered within the required time frame, the claimant is free to pursue common law remedies and the opinion of the panel is not admissible unless the claimant caused the failure of the panel to render a decision. Use in Litigation. When the panel has rendered its opinion, if there is no settlement litigation can continue. In a lawsuit, the panel's opinion is admissible but not conclusive. The panel members, except for the judge, may be called as witnesses. Since the panel's opinion is an item of evidence which must be subject to scrutiny in order to test its probative value and credibility, the members may be questioned

- 542 - extensively during pre-trial depositions about virtually all aspects of their procedures and deliberations.

C. Settlement of Medical Malpractice Claims: Themes and Variations

FAIRFAX HOSPITAL SYSTEM v. McCARTY 244 Va. 28, 419 S.E.2d 621 (1992)

JUSTICE COMPTON announced the opinion of the Court: This is an appeal in a medical malpractice action brought against a hospital based on the alleged negligent failure of a labor and delivery nurse to notify promptly the attending physician of the deteriorating condition of a fetus. On June 3, 1987, about 9:00 a.m., appellee Janet Platt McCarty, age 31 and pregnant with her first child, was admitted to Fairfax Hospital, operated by appellant Fairfax Hospital System, Inc. Approximately 12 hours later, appellee Luke McCarty was born permanently impaired, both neurologically and developmentally. Initially, a Notice of Claim for medical malpractice was filed in October 1988 against Dr. Paul S. Burka and the Hospital for the events leading to the delivery of the baby. Also the Notice asserted a claim against Burka, Dr. Michael A. Ross, and the Hospital for the events culminating in an allegedly unnecessary hysterectomy performed on the mother. Prior to the Medical Malpractice Review Panel Hearing, the mother settled her claim against Ross for $ 150,000. . . . On September 26, 1989, the mother and father (appellee Michael Noone McCarty), individually, and the infant, through his next friend, filed the present action against the Hospital and Burka. In a two-count amended motion for judgment, the plaintiffs sought damages for the injury to the infant, for various physical injuries to the mother (including postpartum injury), and for the mother's emotional distress relating to the injury to the fetus. Prior to trial, the claims against Burka were settled. The proposed settlement provided for a structured payment to the infant, the cost of which was not to exceed $ 500,000, for his claim. Additionally, $ 200,000 was to be paid the mother for her emotional distress claim, and $ 600,000 for her hysterectomy claim. In October 1990, after the trial court approved the infant's settlement, the compromises were consummated and the court entered an order dismissing the claims against Burka. Following the Burka settlements, the mother nonsuited the hysterectomy claim against the Hospital. The case proceeded to trial before a jury on three separate claims against the Hospital: (1) the infant's claim for his in utero injuries; (2) the parents' claim for the infant's medical expenses; and (3) the mother's emotional distress claim. After a 10-day trial held in November 1990, the jury returned verdicts in favor of the infant in the amount of $ 1,250,000; in favor of the parents in the amount of $1,500,000 for the infant's medical expenses; and in favor of the mother in the amount of $750,000 for her emotional distress claim. Following post-trial motions, the court

- 543 - below reduced the infant's verdict to the amount of the $ 1 million statutory cap and further reduced the verdict by the $ 500,000 settlement with Burka. The court also ruled that the parents could not recover for the infant's medical expenses because that amount was subject to the infant's cap which had been exhausted by his recovery. Finally, the mother's verdict was reduced by the amount of her $ 200,000 settlement with Burka. Thus, the trial court entered judgment in favor of the infant in the amount of $500,000 and in favor of the mother in the amount of $ 550,000. We awarded the Hospital this appeal from the April 1991 judgment order. . . . [T]he mere recital of the facts in the light most favorable to the plaintiffs shows there was abundant, credible evidence, which the jury was entitled to accept, establishing that McClure's breach of the standard of care was a proximate cause of the injuries and damages sustained; no further analysis of the evidence is necessary. It is sufficient to state that a jury issue was presented on the question whether McClure's delay in recognizing and reacting to fetal distress, and in performing appropriate nursing intervention, including timely notice to the attending physician, were substantial breaches of the standard of care. It was for the jury to say whether these breaches by the Hospital's employee constituted an efficient cause of the losses suffered by the plaintiffs. Thus, we hold that the trial court correctly refused to enter summary judgment in favor of the Hospital. Next, we shall address the Hospital's contention that the "pretrial settlements by the McCartys with two joint tortfeasors," Ross and Burka, "consumed the entire statutory cap applicable to this case because the amount stipulated by the agreement pursuant to § 8.01-35.1 exceeded the sum of one million dollars," and there should be no recovery by the infant. The Hospital argues that it is due a credit against the infant's recovery for the amount of the $ 150,000 Ross settlement and for the undisclosed sum of payments to be made in the future in the structured settlement with Burka. According to the Hospital, noting that the infant's life expectancy is from 30 to 60 years, the payments ultimately to be made to him pursuant to the settlement agreement will total between $ 1.2 and $ 2.2 million. The Hospital says, "Payment of the lower figure is absolutely guaranteed by the Agreement and the higher figure is that which will be paid on Luke's behalf if he lives to age 60." Thus, the Hospital contends, the trial court "was obligated to credit at least ($1.2 million), which would have reduced the permissible recovery against Fairfax Hospital to zero." We do not agree. As pertinent, Code § 8.01-35.1 provides: A. When a release or a covenant not to sue is given in good faith to one of two or more persons liable in tort for the same injury, . . 1. It shall not discharge any of the other tort-feasors from liability for the injury, . . . unless its terms so provide; but any amount recovered against the other tort-feasors or any one of them shall be reduced by any amount stipulated by the covenant or the release, or in the amount of the consideration paid for it, whichever is the greater. In the first place, the settlement with Ross was for an injury solely to the mother and the infant received no consideration for that settlement. Ross was not involved in the events which caused the infant's injuries, and the infant made no claim against Ross. Claim was made against Ross, along with Burka, for the involvement of Ross in the

- 544 - events culminating in the mother's hysterectomy, which was performed several hours after the child's birth. The pre-natal injury to the infant and the post-natal injury to the mother were separate incidents and separate claims. Thus, Ross was not liable for "the same injury," in the language of the statute. And, the fact relied on by the Hospital that Ross demanded and obtained releases from all the McCartys does not change this result. In the second place, the trial court did not err in utilizing the present value of the infant's structured settlement with Burka in reducing the infant's verdict against the Hospital. Under Code § 8.01-35.1, the Hospital is not entitled to a credit equal to the undiscounted sum of payments which the settlement agreement provides for the infant. Significantly, the second sentence of subparagraph (1) of § 8.01-35.1(A) provides: In determining the amount of consideration given for a covenant not to sue or release for a settlement which consists in whole or in part of future payment or payments, the court shall consider expert or other evidence as to the present value of the settlement consisting in whole or in part of future payment or payments. Focusing only on the first sentence of subparagraph (1), the Hospital argues that because the amount of the future payments is "stipulated" in the release given on behalf of the infant to Burka and because the amount of the guaranteed payments thus "stipulated" exceeds the stated "consideration" of $ 500,000, and exceeds the $ 1 million statutory cap, no recovery can be had against it. This contention completely disregards the second sentence of subparagraph (1). That sentence expressly contemplates a case like this where a joint tort-feasor obtains a release based upon payments to be made in the future. The sentence provides that the "present value" of a structured settlement shall be the basis for reduction of a subsequent verdict or judgment obtained against a non-settling joint tort-feasor. We agree with the trial court that it would have been unnecessary for the General Assembly to have provided how to compute consideration in a future-payment settlement unless it intended for that figure to be used to reduce a verdict or judgment against another tort- feasor. Consequently, the trial court was justified in finding "the present value" of the settlement to have been $ 500,000, and in reducing the infant's verdict in that amount only. The final three issues require no extended discussion. We reject the Hospital's contention that the McCartys settled with Burka upon an agreement for an oral release, and that an accord and satisfaction resulted which operated to release the Hospital from all claims. The consummated settlement was preceded by an agreement in principle memorialized by an exchange of letters setting forth the parties' understanding and was expressly conditioned on approval of the infant settlement by the trial court. Burka was released from liability to the McCartys only after execution of a written settlement agreement and release on October 4, 1990 and final approval of the infant's claim by the trial court in an order entered October 25, 1990. The release was given in accordance with § 8.01-35.1, no accord and satisfaction occurred, and the Hospital was not thereby released. Likewise, we reject the Hospital's contention that the mother was not entitled to recover for her emotional distress resulting from the injuries to the fetus. The Hospital ignores our recent rulings on this issue. In Bulala v. Boyd, 239 Va. 219, 389 S.E.2d 670 (1990), we held that a mother who had given birth to an impaired child would be

- 545 - entitled to recover, as a part of her individual claim, for mental suffering resulting from the birth of the defective child. Id. at 229, 389 S.E.2d at 675. This was based on our decision in Modaber v. Kelley, 232 Va. 60, 348 S.E.2d 233 (1986), that an injury to a fetus constitutes injury to the mother because an unborn child is a part of the mother until birth. Id. at 66, 348 S.E.2d at 236-37. Additionally, because the mother was a "patient," within the meaning of Code § 8.01-581.15 placing a cap on the total amount recoverable for any injury to "a patient," she was "entitled to the benefit of one statutory cap for her compensatory damage claim." Bulala, 239 Va. at 229, 389 S.E.2d at 675. Consequently, the trial court did not err in entering judgment for the mother on her emotional distress claim.

- 546 - FAIRFAX HOSPITAL SYSTEM v. NEVITT 249 Va. .591, 457 S.E.2d 10; 1995

JUSTICE POFF delivered the opinion of the Court: In this appeal from a judgment for a plaintiff in a medical malpractice case, the issues framed require us to consider (1) the statute granting a plaintiff the right to settle with one tortfeasor without releasing joint tortfeasors, Code § 8.01-35.1, and (2) the interplay of the provision in that statute requiring a settlement credit against "any amount recovered against the other tort-feasors" and the statute commonly called "the medical malpractice recovery cap", Code § 8.01-581.15. In September 1988, Diane M. Nevitt, born with tetralogy of fallot (openings between the chambers of the heart) and other congenital heart defects, underwent cardiac surgery in a hospital operated by Inova/Fairfax Hospital System, Inc. (the hospital). Following a cardiac arrest five days later, Nevitt sustained permanent paraplegia and other grievous injuries. Alleging medical malpractice, Nevitt sued the hospital, Pediatric Cardiology Associates (PCA), Dr. Mohamed Mardini (a principal in PCA), and certain other defendants who are uninvolved in this appeal. Following settlement negotiations, Nevitt's attorney wrote a letter dated December 30, 1992 to counsel representing PCA and Mardini which stated in part: This letter is to memorialize the agreement reached today. Plaintiff has agreed to settle her claims against Pediatric Cardiology Associates in the amount of $ 600,000. She will dismiss her claims against Dr. Mardini. The settlement agreement and praecipe of settlement shall clearly reflect plaintiff's intention to proceed against the remaining defendants . . . pursuant to Virginia Code Section 8.01-35.1. After you have confirmed the agreement by sending me a return fax, I will inform the Court. The next day, counsel for PCA and Mardini confirmed the agreement by sending Nevitt's counsel a facsimile copy of the "Joint Tortfeasor Release" approved by both attorneys. Since the agreement was reached on the eve of the New Year's holiday, counsel further agreed that consummation of the settlement would have to wait until the $ 600,000 check had been drawn and delivered. Just before the jury was to be empaneled on January 4, 1993, attorneys for Nevitt, PCA, and Mardini announced to the court and to other counsel that one of the other judges of that court had entered an order earlier that morning that provided in part: As EVIDENCED by the endorsement of counsel appearing below, plaintiff's claims against defendant Mohamed Mardini, M.D. are Dismissed with Prejudice. Plaintiff's claims against defendant Pediatric Cardiology Associates have been settled, pursuant to Virginia Code §8.01-35.1, and are also Dismissed with Prejudice. This cause continues against all remaining co-defendants. Counsel for the hospital, previously unaware that the order had been entered, reserved the right to object on the ground that the order "may have some significance to my

- 547 - client's position as a joint tort-feasor under 8.01-35.1". The court declared that counsel had "sufficiently preserved" the rights of his client. During the course of the trial, Nevitt accepted delivery of the settlement check and, on January 14, 1993, signed a copy of the "Joint Tortfeasor Release" agreed upon in December. On January 20, 1993, Nevitt recovered a jury verdict against the hospital for $ 2,000,000. Contending that Nevitt's settlement with PCA and Mardini had not been achieved in compliance with the requirements of Code § 8.01-35.1, the hospital filed a plea of release. The trial court overruled the plea and, on appeal, that ruling is the subject of the hospital's first assignment of error. At common law, a plaintiff's "release of one tortfeasor releases all joint tortfeasors." Wright v. Orlowski, 218 Va. 115, 120, 235 S.E.2d 349, 352 (1977). Enactment of the statutory ancestor of Code § 8.01-35.1 amended that rule by giving a plaintiff a right, under prescribed conditions, to settle selectively with some tortfeasors without forfeiting remedies against others. Issues related to such remedial rights are to be determined by the law prevailing at the time the cause of action accrued. See Shiflet v. Eller, 228 Va. 115, 123, 319 S.E.2d 750, 755 (1984). As it read when the tort in this case occurred, Code § 8.01-35.1 stated in pertinent part: A. When a release . . . is given in good faith to one of two or more persons liable in tort for the same injury . . . : 1. It shall not discharge any of the other tort-feasors . . . unless its terms so provide; but any amount recovered against the other tort-feasors or any one of them shall be reduced by . . . the amount of the consideration paid for it. . . . A release . . . given pursuant to this section . . . shall be considered by the court in determining the amount for which judgment shall be entered; and 2. It shall discharge the tort-feasor to whom it is given from all liability for contribution to any other tort-feasor. B. A tort-feasor who enters into a release . . . is not entitled to recover by way of contribution from another tort-feasor whose liability for the injury . . . is not extinguished by the release . . . . C. A release . . . given pursuant to this section shall be subject to the provisions of §§ 8.01-55 and 8.01-424. D. This section shall apply . . . to all releases executed on or after July 1, 1980, regardless of the date the causes of action affected thereby accrued. The hospital argues that, in order to avoid the effect of the common-law rule, Nevitt was required by this statute to subscribe "a written release before dismissing PCA with prejudice from the case." The hospital relies upon the words "releases executed" used in paragraph D of the statute to fix the date the section applies. In our view, those words are not a mandate that a plaintiff sign a written release but merely a collective synonym for the several releases addressed in the preceding paragraphs of the statute, i.e., a release "given in good faith", a release "given pursuant to this section", a release "given", and a release into which a party "enters". The hospital also cites Jones v. General Motors Corp., 856 F.2d 22 (4th Cir. 1988). There, the court held that an oral release of one tortfeasor did not comply with the requirements of the Virginia settlement statute and that a joint tortfeasor was released as at common law. Jones is factually inapposite. As the court noted, "there was apparently

- 548 - no writing memorializing the settlement . . . ." Id. at 23. Indeed, there was no writing at all until two and one-half years later when the plaintiff executed a written release, a document the court characterized as "invalid and not given in good faith." Id. at 25-26. We think that the relevant precedent is our decision in Fairfax Hospital System v. McCarty, 244 Va. 28, 419 S.E.2d 621 (1992). There, the hospital contended, as it does here, that the plaintiffs had settled with some tortfeasors "upon an agreement for an oral release . . .which operated to release the Hospital from all claims." Id. at 37, 419 S.E.2d at 626. Finding that "the consummated settlement was preceded by an agreement in principle memorialized by an exchange of letters setting forth the parties' understanding", we held that "the release was given in accordance with § 8.01-35.1 . . . and the Hospital was not thereby released." Id. Here, the settlement, consummated by delivery of the check and execution of the Joint Tortfeasor Release, "was preceded by an agreement in principle memorialized by" several writings, namely, the letter addressed by Nevitt's counsel to PCA's counsel; the copy of the written release later executed, unchanged, by Nevitt; and the order subscribed by counsel for Nevitt and PCA reciting that "plaintiff's claims against Pediatric Cardiology Associates have been settled, pursuant to Virginia Code § 8.01- 35.1 . . . ." Applying the reasoning in McCarty, we will affirm the trial court's ruling that Nevitt complied with the requirements of Code § 8.01-35.1 and that the hospital was not released. We now consider the hospital's alternative assignment of error. In the final judgment order, the trial court reduced the $ 2,000,000 jury verdict rendered against the hospital by $ 600,000 (the amount of the PCA settlement) and then reduced the remainder ($1,400,000) to the medical malpractice recovery cap ($ 1,000,000). The hospital contends that the court should have reduced the verdict to the amount of the statutory cap and then applied the statutory credit for the amount of the settlement to determine the quantum of the judgment. We look to the pertinent language of the two statutes. Code § 8.01-581.15 provides: In any verdict returned against a health care provider in an action for malpractice . . . which is tried by a jury or in any judgment entered against a health care provider in such an action which is tried without a jury, the total amount recoverable for any injury to . . . a patient shall not exceed one million dollars. A portion of Code § 8.01-35.1, quoted earlier, provides that a release given in good faith to one of two or more persons liable in tort for the same injury . . . shall not discharge any of the other tort-feasors . . . but [that] any amount recovered against the other tort-feasors or any one of them shall be reduced by . . . the amount of the consideration paid for it. . . . A release . . . given pursuant to this section . . . shall be considered by the court in determining the amount for which judgment shall be entered . . . . The right of recovery to which the medical malpractice recovery cap is addressed is "the total amount recoverable for any injury to . . . a patient". The adjective

- 549 - "recoverable" modifies the words "total amount". What is "recoverable" is that which is capable of recovery. Hence, the mandate of Code § 8.01-581.15 is that in any judgment entered against a health care provider, the quantum of the recovery for a medical malpractice injury cannot exceed the aggregate amount capable of recovery. Our interpretation of the recovery cap is reinforced by the clear import of the language in Code § 8.01-35.1. That statute expressly provides that "in determining the amount for which judgment shall be entered" against a defendant at trial, "any amount recovered . . . shall be reduced by . . . the amount of the consideration paid" in settlement with a joint tortfeasor. The effect of the formula the trial court employed "in determining the amount for which judgment shall be entered" was to deny the hospital any credit for the PCA settlement. In support of that formula, Nevitt contends that the hospital is not entitled to the benefit of that credit because PCA was not a health care provider under the definition of that term prevailing at the time of the settlement. We think that fact is wholly immaterial. The settlement credit mandate of Code § 8.01-35.1 does not require that a person who has been released be a health care provider. It requires only that such a person and the defendant health care provider at trial be joint tortfeasors mutually liable for the same injury; PCA is such a joint tortfeasor. We conclude that the plain meaning of the two statutes in issue, read together, is that where there is a verdict by a jury or a judgment by a court against a health care provider for "injury to . . . a patient" and the total amount recovered in that action and in all settlements related to the medical malpractice injury exceeds one million dollars, the total amount the plaintiff can recover for that injury is one million dollars. 24 Accordingly, we hold that the trial court erred when it failed to apply the $ 600,000 credit for the PCA settlement against the $1,000,000 statutory recovery cap in determining the quantum of Nevitt's judgment. In summary, we will affirm the trial court's ruling that the hospital was not released from liability as a joint tortfeasor; we will reverse the judgment fixing damages against the hospital in the sum of $ 1,000,000; and we will enter final judgment for Nevitt in the sum of $ 400,000 with interest at the statutory rate from January 20, 1993. Affirmed in part, reversed in part, and final judgment. Justice Whiting, with whom Justice Hassell and Justice Keenan join, dissenting. I agree with the majority's disposition of the hospital's plea of release, but disagree with its application of the amount paid in settlement against the amount of the medical malpractice cap (the cap) instead of the amount of the verdict. I believe the majority's construction of the pertinent language of the two statutes is (1) illogical and inconsistent, and (2) contrary to the clearly expressed legislative purposes of each statute and the constitutional justification for the medical malpractice statute. In dealing with the interplay between the cap in the medical malpractice statute and the settlement statute, the statutes must be applied in a manner consistent with their language and purposes. Here, the majority has applied the settlement credit statute,

24 We think our conclusion promotes the public policy purpose of the Medical Malpractice Act which was designed to confront substantial problems of "escalating costs of medical malpractice insurance and the availability of such insurance . . . adversely affecting the health, safety, and welfare of Virginia's citizens." Etheridge v. Medical Center Hospitals, 237 Va. 87, 94, 376 S.E.2d 525, 528 (1989) (construing Preamble to Act).

- 550 - obviously intended to prevent a plaintiff from recovering more than the actual damages, to reduce a legislative cap, the amount of which is fixed without regard to those damages. And, in doing so, I think the majority uses the cap in a manner foreign to its purpose and consequent constitutional justification of fostering affordable medical malpractice insurance. Etheridge v. Medical Center Hosps., 237 Va. 87, 93-94, 376 S.E.2d 525, 527-28 (1989). In Etheridge, we said that this social purpose provided a rational and, therefore, constitutional basis for the cap. Id. at 100, 376 S.E.2d at 531. We further noted that "Code §8.01-581.15 has no effect upon [a plaintiff's] right to have a jury or court render an individual decision based on the merits of the case." Id. at 99, 376 S.E.2d at 531. In an apparent attempt to avoid this constitutional problem, the majority states that "the mandate of Code § 8.01-581.15 is that . . . 'in any judgment entered against a health care provider' the quantum of the recovery cannot exceed the aggregate amount capable of recovery." Yet, the effect of the majority opinion is to put the cap on the verdict as well as the judgment, since it effectively reduces the verdict to $ 1 million before applying the settlement credit. In support of its conclusion, the majority cites two cases in which the defendants (including the settling defendant, Boyd v. Bulala, 877 F.2d 1191, 1193 n.1 (4th Cir. 1989)) were all health care providers. Bulala v. Boyd, 239 Va. 218, 228, 389 S.E.2d 670, 675 (1990); Fairfax Hospital Sys. v. McCarty, 244 Va. 28, 419 S.E.2d 621 (1992). However, every defendant in those cases was entitled to the benefit of the cap, and no one plaintiff could have recovered more than $ 1 million in the aggregate against all the defendants in either case. Etheridge, 237 Va. at 105, 376 S.E.2d at 535 (single medical malpractice cap applied to defendants, all health care providers). The issue here involves the amount received in settlement from a defendant which was not a health care provider.25 And, in this case, the jury's "individual decision on the merits of the [plaintiff's] case [for damages]" was that she was entitled to recover $ 2 million. The majority regards the fact that PCA was not a health care provider as "wholly immaterial" since "the settlement credit mandate of Code § 8.01-35.1 does not require that a person who has been released be a health care provider." Even if this were a proper construction and application of that statute in this case, I think that this application of the cap before applying the credit effectively deprived the plaintiff of her Etheridge-articulated constitutional right to have a jury make an individual decision based upon one of the most important elements of the case--the quantum of damages. Accordingly, I consider this ruling an unconstitutional construction and application of the statute. And since I believe the majority effectively bases its reasoning upon the premise that no verdict could have been returned against a health care provider in excess of the

25 I do not agree with the hospital's contention that PCA should be treated as a health care provider because its "settlement was, in fact, clearly for the benefit of [Dr. Mardini], who, as part of the settlement that had been agreed to, was . . . dismissed with prejudice along with PCA." The hospital recognized in the trial court that the record might not have provided sufficient support for this contention. Hence, in a memorandum filed with the trial court in support of its motion to reconsider, the hospital asked for "the opportunity to present evidence to establish further the rather logical and reasonable proposition" that the dismissal of Dr. Mardini with prejudice was the "quid pro quo" for PCA's payment and release. However, the record fails to indicate that the hospital pursued this request. I would conclude that the record is insufficient to show, as a matter of law, that PCA's settlement was on Dr. Mardini's behalf.

- 551 - cap or "total amount recoverable," it decides an issue the hospital did not raise in the trial court. Accordingly, I do not think that we should consider it on appeal. Rule 5:25. The fact is that a $ 2 million verdict was returned against the hospital. Hence, the issue framed in the trial court and this Court is how the settlement amount should be credited against that verdict. Thus, under the facts and issues presented in this case, I think the trial court correctly applied the $ 600,000 settlement against the $ 2 million verdict and properly reduced the resulting amount to the $ 1 million cap. Further, even if the issue had been properly raised, I would not apply the cap as the starting point for the calculation, as the majority has done. In my view, an application of the language of the medical malpractice statute to reduce a verdict against a health care provider to $ 1 million before applying the settlement credit "is simply illogical and is not within the contemplation of the . . . statutory provisions dealing" with the cap and the settlement credit provisions. DKM Richmond Associates, L.P. v. City of Richmond, 249 Va. ___, ___ S.E.2d___ (1995) (this day decided). I agree with the majority's statement of the applicable standard of statutory construction in this case. However, I disagree with its conclusion that a literal construction of the two statutes requires the majority's result. Even if the majority's literal construction required this result, I respectfully suggest that, in the language of the standard quoted by the majority, such "a literal construction would involve . . . manifest absurdities." Some of them are: 1. If the plaintiff had not settled with PCA, under the majority's rationale she could have collected the $ 2 million verdict since PCA would have been liable for that amount. As a practical matter, the plaintiff probably would have collected $ 1 million from each of the joint tortfeasors with the hospital receiving no credit for the $ 1 million payment by PCA. Since the plaintiff settled with PCA, the majority penalizes the plaintiff by giving the hospital full credit for PCA's payment. Obviously, future plaintiffs in similar situations will not settle their cases and be subjected to such a penalty. I think the majority's decision (a) is contrary to the settled principle of law "favoring compromise and settlement of disputed claims," Snyder- Falkinham v. Stockburger, 249 Va. , , S.E.2d , (1995) (this day decided), and (b) defeats one of the primary purposes of the settlement statute--that of encouraging settlements and a fair distribution of the burden of the damages among the joint tortfeasors. And, contrary to the majority, I think that the reduction of the recovery to an amount below the cap is a judicial, not a legislative, promulgation of a public policy. 2. As noted earlier, the majority misconstrues and misapplies these two statutes in a manner contrary to their primary purposes by deducting a settlement amount geared to the plaintiff's individual damage claim from an arbitrary cap on recoveries against health care providers (a social purpose having nothing to do with the plaintiff's individual claim for damages). 3. The majority does not explain how and why these statutes, read together, require the cap to be applied before crediting the settlement. Instead, the majority simply applies the settlement credit statute, Code § 8.01-35.1, to the amount of the verdict because it says that this statute requires only that the settling and nonsettling parties be joint tortfeasors, with no requirement that the settling party be a health care provider. In my opinion, these statutes, read together, create ambiguities and inconsistencies requiring us to consider the legislative purpose in enacting each statute. See USAA Cas.

- 552 - Ins. v. Alexander, 248 Va. 185, 194, 445 S.E.2d 145, 150 (1994). Since the majority ignored those purposes in construing these statutes, it has applied the settlement credit statute in a manner incompatible with the purposes of both statutes. In sum, I do not think that the language of Code § 8.01-581.15 compels a jury or court to impose the cap before considering the amount of damages to which the plaintiff would otherwise be entitled. Rather, I believe this code section can be read to put "a cap" on the "total amount recoverable" so that the quantum of the recovery against health care providers in the final judgment will not exceed the cap. I think the use of the words "total amount recoverable" (emphasis added) manifests a legislative intent to apply the medical malpractice cap after a calculation of all appropriate adjustments to whatever amount a jury or a court concludes should be awarded to the plaintiff-patient, based upon the merits of her damage claim. In my opinion, this application of the language is consistent with the medical malpractice statute's clearly expressed purpose and underlying constitutional justification of fostering medical malpractice insurance at affordable rates. See Bulala, 239 Va. at 227-28, 389 S.E.2d at 674-75 (clear expression of statutory purpose); Etheridge, 237 Va. at 99-100, 376 S.E.2d at 531 (constitutional justification). Here, in applying the language of each statute in harmony with the purposes of both statutes, I would avoid the majority's illogical and inconsistent construction by concluding that those purposes are fully served by (1) crediting the liability the hospital would have had were it not a health care provider with the amount of the settlement, thereby reducing the verdict to $ 1,400,000, (2) further reducing that amount to the cap, the "total amount recoverable" in a medical malpractice action, and (3) entering judgment for that amount. Accordingly, I would affirm the judgment across the board.

- 553 -

- 554 - Notes on Medical Malpractice

Medical Malpractice Complaints. The General Assembly in 2005 passed legislation to curb baseless (or untested) medical malpractice claims. Code § 8.01-20.1 requires a certification of expert witness opinion at time of service of process. Under this provision, every pleading initiating a medical malpractice action, at the time the plaintiff requests service of process upon a defendant, shall be deemed a certification that the plaintiff has obtained from an expert witness whom the plaintiff reasonably believes would qualify as an expert witness pursuant to subsection A of § 8.01-581.20 a written opinion signed by the expert witness that, based upon a reasonable understanding of the facts, the defendant for whom service of process has been requested deviated from the applicable standard of care and the deviation was a proximate cause of the injuries claimed. This certification is not necessary if the plaintiff, in good faith, alleges a medical malpractice action that asserts a theory of liability where expert testimony is unnecessary because the alleged act of negligence clearly lies within the range of the jury's common knowledge and experience. Code § 8.01-20.1. The certifying expert is not be required to become an expert witness expected to testify at trial nor shall any defendant be entitled to discover the identity of the certifying expert or the nature of the certifying expert's opinions. Rather, the statute provides that – should the certifying expert be identified as an expert expected to testify at trial – the opinions and bases therefor shall be discoverable pursuant to Rule 4:1 of the Rules of Supreme Court of Virginia with the exception of the expert's status as a certifying expert. Upon written request of any defendant, the plaintiff in a medical malpractice action must, within 10 business days after receipt of such request, provide the defendant with a certification form that affirms that the plaintiff had obtained the necessary certifying expert opinion at the time service was requested or affirms that the plaintiff did not need to obtain a certifying expert witness opinion. If the plaintiff did not obtain a necessary certifying expert opinion at the time the plaintiff requested service of process on a defendant as required under this section, the court "shall impose sanctions according to the provisions of § 8.01-271.1 and may dismiss the case with prejudice." Code § 8.01- 20.1. Case law will be needed to develop the contours of this requirement. Wrongful Death Actions Against Healthcare Providers. The General Assembly in 2005 also passed legislation to curb baseless (or untested) wrongful death actions. Like the med-mal statute noted just above, Code § 8.01-50.1 requires a certification of expert witness opinion at time of service of process. Under this provision, every pleading initiating an action pursuant to § 8.01-50.1 for wrongful death against a health care provider, at the time the plaintiff requests service of process upon a defendant, shall be deemed a certification that the plaintiff has obtained from an expert witness whom the plaintiff reasonably believes would qualify as an expert witness pursuant to subsection A of § 8.01-581.20 a written opinion signed by the expert witness that, based upon a reasonable understanding of the facts, the defendant for whom service of process has been requested deviated from the applicable standard of care and the deviation was a proximate cause of the injuries claimed. The procedures and penalties are similar to those under § 8.01-20.1 and also invoke the sanction provisions of § 8.01-271.1 as well as possible dismissal of the case with prejudice. § 8.01-50.1.

- 555 - Malpractice Review Panel Proceedings and Trial Testimony. In one modern case, plaintiffs, as co-administrators of a decedent's estate, brought a medical malpractice claim against the defendants, a physician and his employer, alleging that their medical negligence led to the decedent's death from a ruptured thoracoabdominal aortic aneurysm. Members of a medical malpractice review panel were designated pursuant to Code § 8.01-581.2, but the panel rendered its decision more than six months after the designation. Without plaintiffs' participation, the panel found that the evidence did not support a conclusion that defendants had failed to comply with the appropriate standard of care. At trial, the court admitted the panel's opinion and its members' testimony thereon, permitted two panel members to testify as experts for the defense over plaintiff's objection, granted jury instructions on the issue of contributory negligence, refused an instruction regarding concurring negligence, and allowed the defendant-physician, over the plaintiffs' hearsay objection, to recite the opinion of a non-testifying physician as to the applicable standard of care. The jury returned a verdict in the defendants' favor. The trial court entered judgment on the verdict. On appeal the Supreme Court held that the trial court erred in admitting a medical malpractice review panel's opinion favoring the defense and testimony of its members into evidence when that opinion was not timely rendered under Code § 8.01-581.7:1, permitting two panel members to testify as experts for the defense, granting jury instructions on the issue of contributory negligence, and allowing the defendant physician to recite the out-of-court opinion of a non-testifying physician as to the applicable standard of care. Chandler v. Graffeo, 268 Va. 673, 604 S.E.2d 1 (2004). Relationship to Timeliness. Code § 8.01-581.7(A) provides that a medical malpractice review panel shall, after receiving all the evidence and after joint deliberation, render an opinion within 30 days. Code § 8.01-581.7:1 provides that unless the parties otherwise agree, any opinion of the medical malpractice review panel shall be rendered no later than six months from the designation of the panel unless the judge shall extend the period one time, not to` exceed ninety days, upon a showing of extraordinary circumstances. It provides further that if the opinion of the panel is not rendered within the time provided, any panel opinion rendered subsequently shall be inadmissible as evidence unless the failure of the panel to render a decision within the time provided was caused by delay on the plaintiff's part. In the case before the Supreme Court, nothing in the record supported the trial court's finding that "extraordinary circumstances" existed to justify setting the medical malpractice review panel hearing date in this case beyond the statutory six-month period. Although the trial court opined that such circumstances existed, due to the fact that one of the witnesses was going to be unavailable to testify on the original panel hearing date, the court did not explain why the hearing could not have been conducted on another date within this period at a time when three months remained prior to the date of its expiration. Therefore, the trial court erred in admitting into evidence the panel's opinion and its members' testimony thereon. See Chandler v. Graffeo, 268 Va. 673, 604 S.E.2d 1 (2004). Under Code § 8.01-581.8, after the medical malpractice review panel issues an opinion, the opinion is admissible as evidence, and either party has the right to call, at his cost, any member of the panel, except the judge, as a witness. Furthermore, this statute provides that if called, each witness shall be required to appear and testify. The Supreme Court held that nothing in the statutory scheme respecting a medical malpractice review panel's procedures gives either party the right to retain an impartial

- 556 - panel member as an expert. The impartiality required by Code § 8.01-581.3 must remain through the conclusion of the trial. Impartiality would become an impossibility if either party were permitted to retain panel members as experts because no potential panel member would be without any anticipation concerning future consultation regarding the claimant or his family. Moreover, the panel members' appointment to and service on the panel would tend to clothe the expert, in the jury's view, with superior qualifications and greater credibility. Thus it was error to permit two of the panel's members to testify as the defendants' retained experts. Their testimony violated the intent and spirit of the statutory scheme; i.e., the impartiality of the panel proceeding. Chandler v. Graffeo, 268 Va. 673, 604 S.E.2d 1 (2004).

- 557 -

CODE SECTION & RULE FINDER Page Code § 1-10 [Common Law Applies Unless Displaced] ...... 117, 338 Code § 1-11 [Acts of Parliament Apply Unless Displaced]...... 117 Code § 1-210 [Computing Due Dates]...... 338 Code § 8.01-2 [Definitions in Civil Litigation]...... 212 Code § 8.01-3 [Rules of Court promulgation' ...... 30 Code § 8.01-4 [Local Rules limitations] ...... 949 Code § 8.01-5 [Joinder]...... 583 Code § 8.01-6 [Amendment of Pleadings; New Defendants; Misnomer] ...... 484 Code § 8.01-6.1 [Amendment of Pleadings Changing Claims] ...... 484 Code § 8.01-7 [Joinder] ...... 583 Code § 8.01-8 [Suits by Minors] ...... 212 Code § 8.01-9 [Guardians] ...... 212 Code § 8.01-19 [Substitution of Parties] ...... 224 Code § 8.01-21 [Substitution of Parties] ...... 224 Code § 8.01-25 [Substitution of Parties] ...... 225 Code § 8.01-28 [Verification of Pleadings] ...... 471 Code §8.01-34 [Contribution of Joint Tortfeasors]...... 505 Code § 8.01-35.1[Joint Tortfeasors settlement and release] ...... 505, 529 Code § 8.01-50 [Death Cases Limitation Period] ...... 801 Code § 8.01-195.3 [Sovereign immunity waiver]...... 342 Code § 8.01-195.6 [Notice of claims vs. Commonwealth] ...... 343,349 Code § 8.01-229 [Tolling Limitation Principles] ...... 803 Code § 8.01-230[Accrual of Causes of Action] ...... 748 Code § 8.01-231[Limitations against Sovereign] ...... 834 Code § 8.01-235 [Raising Statute of Limitations Defenses]...... 468, 829 Code § 8.01-243 [Personal Injury/Property Damage Limitations] ...... 785, 807 Code § 8.01-243.1 [Medical Malpractice Claims by Minors Limitations] ...... 808 Code § 8.01-244 [Death Cases Limitation Period] ...... 801 Code § 8.01-246 [Contract Periods]...... 754

Page Code § 8.01-247 [Choice of Contract Periods] ...... 755, 824 Code § 8.01-249[Accrual on Discovery]...... 784 Code § 8.01-250[Construction Services Lim. Period] ...... 765 Code § 8.01-257 [Venue] ...... 241 Code § 8.01-258 [Venue] ...... 241 Code § 8.01-260 [Venue] ...... 243 Code § 8.01-261 [Venue] ...... 244 Code § 8.01-262 [Venue] ...... 246 Code 8.01-263 [Multiparty Venue] ...... 254 Code § 8.01-264 [Objection to Venue, Transfer]...... 257 Code § 8.01-265 [Objection to Venue, Transfer]...... 257 Code § 8.01-266 [Objection to Venue, Transfer]...... 258 Code § 8.01-267 [Objection to Venue, Transfer]...... 258 Code § 8.01-267.1 [Mass Claims procedure statute] ...... 962 Code § 8.01-268 [Commencing Action] ...... 442 Code § 8.01-269 [Commencing Action] ...... 442 Code § 8.01-271.1 [Sanctions] ...... 651 Code §§ 8.01-272 [Pleading Diverse Matters in One Case] ...... 414, 573 Code § 8.01-273 [Demurrer] ...... 450, 461 Code § 8.01-274 [Motions to Strike Defensive Pleadings]...... 451 Code §§ 8.01-275.1[Service in one year]...... 288 Code § 8.01-276 [Motions to Strike and "Written Motions"] ...... 447 Code § 8.01-277 [Motions Challenging Service of Process] ...... 340, 448 Code § 8.01-279 [Verification of Certain Allegations or Defenses]...... 470 Code §§ 8.01-281 [Pleading Alternative claims ] ...... 414, 573 Code § 8.01-286.1 [Waiver of Service of Process] ...... 315 Code § 8.01-288 ["Savings Provision" where Process Gets Through] ...... 339 Code § 8.01-290 [Plaintiff Must Furnish Defendants' Addresses]...... 288 Code § 8.01-293 [Authorization for Sheriff and Others to Serve]...... 288 Code § 8.01-295 [Sheriff's Bailiwick for Service] ...... 289 Code § 8.01-301[Serving Foreign Corps.] ...... 298 Code § 8.01-314 [Papers Served After Appearance] ...... 357 Code § 8.01-316 [Service by Publication] ...... 301

Page Code § 8.01-317 [Service by Publication] ...... 302 Code § 8.01-320 [Service Out of State] ...... 310 Code § 8.01-322 [Relief from Default After Publication Service...... 307 Code § 8.01-327.2 [Immunity From Service] ...... 342 Code § 8.01-328.1 [Long Arm Statute]...... 318 Code § 8.01-329[ Long Arm Service on Secretary of Commonwealth]...... 319 Code § 8.01-335 [Striking Dormant Cases] ...... 956 Code § 8.01-336 [Juries in Equitable Claims]...... 1046 Code § 8.01-364 [Interpleader] ...... 584 Code § 8.01-380 [Nonsuit]...... 969 Code § 8.01-384 [Preservation of Objections Once Made] ...... 460 Code § 8.01-399 [Physician Patient Confidentiality and Discovery]...... 901 Code § 8.01-420 [Deposition Use on Summary Judgment]...... 634 Code § 8.01-420.4 [Deposition Location]...... 884 Code § 8.01-428 [Relief from Default] ...... 392 Code § 8.01-422 [Pleading Equitable Defenses]...... 565 Code § 8.01-442 [Suing One of Several Contract Obligors]...... 506 Code §8.01-443 [Judgments Against Fewer than All Tortfeasors]...... 506 Code § 8.01-623 [Bill of Review] ...... 732

Code § 8.2-725[ UCC Contract Limitation Period] ...... 755 Code § 8.3-307 [Verification of Pleadings] ...... 471

Code § 15.2-209 [Notice of Claims Against Localities] ...... 350 Code § 15.2-1246 [Claims Against Counties]...... 351 Code § 15.2-1248 [Presenting Claims Against Counties]...... 351 Code § 15.2-1809 [Recreational Facilities liability] ...... 612

Code § 16.1-88 [Verification of Pleadings] ...... 471

Code § 53.1-221 [Appointment of a Committee]...... 219 Code § 53.1-222 [Powers/Liabilities of Committee] ...... 219 Code § 53.1-223 [Suits Against Prisoners] ...... 219

Page RULES of COURT Rule 1:4 [General Pleading and Stating Claims]...... 416, 571 Rule 1:5 [Counsel]...... 417 Rule 1:6 [Res Judicata]...... 693 Rule 1:7 [Computing Time for Due Dates]...... 357 Rule 1:8 [Amendment of Pleadings] ...... 482 Rule 1:9 [Trial Court Discretion to Relieve Rule Requirements] ...... 377, 417 Rule 1:10 [Verification of Pleadings]...... 417 Rule 1:12 [Service of Post-Complaint Motions and Papers]...... 357, 490 Rule 1:13 [Submission of Draft Orders Countersigned] ...... 358, 490 Rule 1:17 [Electronic Filing of Papers]...... 954 Rule 1:18 [Pretrial Scheduling Orders] ...... 950

Rule 3:1 [Coverage of Part Three of the Rules]...... 30 Rule 3:2 [Commencement by Filing; form of Complaint]...... 290, 440 Rule 3:4 [Copies of the Complaint]...... 290, 440 Rule 3:5 [Summons; and the One Year Rule]...... 291 Rule 3:7 [Motions for a Bill or Particulars]...... 463 Rule 3:8 [Basic Response Requirement]...... 444, 562 Rules 3:10 [Third Party Practice]...... 576 Rules 3:13 [Joinder and Third-Party Practice] ...... 578 Rule 3:14 [Intervention] ...... 582 Rule 3:16 [Adding New Parties] ...... 223 Rule 3:17 [Substitution of Parties] ...... 226 Rule 3:18 [General Pleading Provisions] ...... 418 Rule 3:19 [Default]...... 368 Rule 3:20 [Motion for Summary Judgment] ...... 634 Rule 3:21 [Jury Trial Rights]...... 1021 Rule 3:22 [Jury Demand Procedure] ...... 1022 Rule 3:23 [Commissioner in Chancery Procedure]...... 155

Rule 4:0 [Application of Part Four of the Rules] ...... 848 Rule 4:1 [Scope of Discovery] ...... 848

Page Rule 4:3 [Persons Before Whom Depositions are Taken]...... 871 Rule 4:5 [Deposition Procedure]...... 872 Rule 4:6 [Depositions by Written Questions Procedure] ...... 876 Rule 4:7 [Use of Deposition Transcripts at Trial]...... 876 Rule 4:8 [Interrogatories] ...... 887 Rule 4:9 [Production and Inspection]...... 892 Rule 4:10 [Physical/Mental Examinations]...... 898 Rule 4:11 [Requests for Admissions]...... 903 Rule 4:12 [Sanctions in Discovery]...... 926 Rule 4:13 [Pretrial Conferences & Orders] ...... 948 Rule 4:15 [Motion Practice] ...... 953

Rule 7B:3 [Pleadings in General District Court]...... 418

CASE LIST Page Advanced Marine Enterprises v. PRC Inc...... 162 Albright v. Burke & Herbert Bank & Trust Co...... 970 Amchem Products v. Newport News Asbestos Plaintiffs ...... 88 Angstadt v. Atlantic Mutual Ins. Co...... 142 Atkins v. Rice ...... 986 Berean Law Group v. Cox...... 991 Belcher v. Kirkwood ...... 820 Bell Atlantic-Virginia, Inc. v. Arlington County ...... 460 Bellis v. Commonwealth ...... 360 Bernau v. Nealon...... 699 Bhatia v. Mehak...... 619 Big Seam Coal (notes)...... 248 Bio-Medical Applications v. Coston ...... 984 Blunt v. Lentz ...... 732 Booth v. Broudy ...... 257 Breeding v. Hensley ...... 459 Brown v. Black...... 933 Brunswick Land Corporation v. Perkinson ...... 746 Buchanan v. Doe ...... 100 Bulala v. Boyd...... 531 Carter v. Hinkle ...... 688 Cassady v. Martin...... 199 Chappell v. Smith ...... 378 Charles v. Precision Tune, Inc...... 399 Chesapeake House on the Bay v. Virginia Nat'l Bank ...... 228 Cofer v. Cofer ...... 493 Commonwealth v. Board of Supervisors ...... 834 Conner v. Rose...... 973 Cook v. Radford Comm. Hospital...... 214 County of Prince William v. Rau ...... 656 Cross v. Sundin...... 220 Dennis v. Jones...... 303 Doummar v. Doummar...... 695

Page Erie Insurance Exchange v. Jones ...... 905 Fairfax Hospital System v. McCarty...... 543 Fairfax Hospital System v Nevitt ...... 547 Faison v. Hudson ...... 261 Felvey v. Shaffer ...... 421 First Charter Land v. Middle Atlantic Dredging ...... 929 Flora v. Shulmister ...... 931 Food Lion, Inc. v. Melton...... 912 Fox v. Deese ...... 183 Frey v. Jefferson Homebuilders, Inc...... 337 Gallop Leasing Corp. v. Nationwide Mutual Ins...... 329 Gay v. Norfolk and Western Railway Co...... 642 Gemco-Ware v. Rongene Mold and Plastics...... 517 Gentry v. Toyota Motor Corporation...... 934 Gilbreath v. Brewster...... 334 Glasco v. Ballard ...... 707 Guth v. Hamlet Associates ...... 771 Halberstam v. Commonwealth...... 344 Hayman v. Patio Products ...... 508 Hogan v. Miller ...... 173 Homeowners Warehouse, Inc. v. Rawlins...... 982 Horne v. Milgrim...... 880 Jenkins v. Bay House Associates ...... 427 Jett v. DeGaetani ...... 177 John G. Kolbe, Inc. v. Chromodern Chair Co...... 323 Jones v. Jones ...... 829 Jones v. R.S. Jones & Assoc., Inc...... 825 Jordan v. Clay’s Rest Home ...... 672 Jordan v. Shands...... 753 Justice v. Natvig ...... 792 Khanna v. Dominion Bank...... 976 Khatchi v. Landmark Restaurant Associates...... 296 Keepe v. Shell Oil Company...... 165

Page Kelly v. Carrico ...... 987 King v. International Harvester Company...... 882 Krantz v. Air Line Pilots Association...... 326 Lackman v Long & Foster Real Estate...... 81 Landcraft Co. v. Kincaid ...... 394 Lee v. Bourgeois...... 603 Lester v. Bennett...... 354 Linhart v. Lawson...... 605 Lostrangio v. Laingford...... 612 Luebbers v. Fort Wayne Plastics...... 765 MacLellan v. Throckmorton...... 757 Mahony v. Becker ...... 831 McManama v. Plunk ...... 995 McMullin v. Union Land & Mgt...... 59 Mechtensimer v. Wilson...... 482 Messina v. Burden...... 587 Meyer v. Brown...... 250 Moore v. Jefferson Hospital...... 419 Mortarino v. Consulting Engineering Services ...... 483 Moses v. Akers ...... 221 Murphy v. Holland ...... 817 Napert v. Napert ...... 494 Nationwide Mutual Ins. v. Jewel Tea Co...... 511 Nedrich v. Jones ...... 669 Nelms v. Nelms ...... 136 Nelson v. Commonwealth ...... 795 Nero v. Ferris...... 718 Newman v. Walker...... 810 Newton v. Veney and Raines ...... 980 Netzer v. Reynolds ...... 728 Niece v. City of Alexandria...... 616 Norfolk & Western Rwy. v. Bailey Lumber ...... 710 Norfolk and Western Rwy. v. Williams ...... 264 Nunnally v. Artis ...... 780

Page Nusbaum v. Berlin...... 676 Orchard Management Co. v. Soto ...... 321 Orgain v. Butler...... 149 Oxenham v. Johnson ...... 657 Paul Business Systems v. Canon U.S.A...... 269 Pavlick v. Pavlick ...... 625 Perk v. Vector Resources Group ...... 452 Perreault v. Free Lance-Star...... 202 Pierce v. Martin ...... 514 Pigott v Moran...... 761 Piland Corporation v. League Construction ...... 574 Powell v. Beneficial Finance...... 404 Powell v. Sears, Roebuck & Company ...... 443 Powers v. Cherin ...... 190 Reed v. Liverman ...... 721 Reid v. Ayscue...... 702 Renner v. Stafford ...... 782 Rochelle v. Rochelle...... 45 Rockwell v. Allman...... 194 Rosillo v. Winters...... 491 Rowe v. Big Sandy Coal Corporation ...... 816 Schultz v. Schultz ...... 176 Selected Risks Insurance Company v. Dean ...... 713 Shaheen v. County of Mathews...... 908 Sheets v. Ragsdale...... 473 Shenandoah Publishing House v. Fanning ...... 857 Shevel's, Inc. v. Southeastern Associates ...... 123 Signal Corp. v. Kean Federal Systems ...... 78 Simon v. Forer...... 1002 Singh v. Mooney ...... 496 Slone v. General Motors Corporation ...... 635 Smith v. Stanaway...... 497 Snead v. Bendigo...... 705 Stanardsville Volunteer Fire Dept. v. Berry ...... 126 Stanfield v. Peregoy...... 598

Page Stanley v. Fairfax Dept. Of Social Services...... 216 State Farm Mutual Ins. v. Haines ...... 922 Super Fresh Food Mkts. v. Ruffin...... 1008 Swann v. Marks...... 209 Tazewell Oil Co. v. United Virginia Bank...... 521 Tiller v. Owen...... 144 Tonti v. Akbari ...... 932 Town of Ashland v. Ashland Investment Co...... 645 TransiLift Equipment, Ltd. v. Cunningham ...... 914 Trustees of Asbury United Methodist Church v. Taylor & Parrish, Inc...... 63 Tullidge v. Board of Supervisors...... 664 USAA Casualty Ins. v. Randolph...... 230 Valley Landscape Company v. Rolland ...... 579 Vicars v. First Virginia Bank - Mountain Empire...... 643 Walsh v. Bennett ...... 930 Ward’s Equipment v. New Holland North America ...... 455 Washburn v. Angle Hardware Co...... 282 Washington v. Anderson ...... 292 Waterfront Marine v. North End 49ers...... 69 Wilby v. Gostel...... 999 Williamsburg Peking Corp. v. Kong...... 673 Witt v. Reynolds Metals Company ...... 311 W.J. Rapp Co. v. Whitlock Equipment Corp ...... 758 Woodbury v. Courtney ...... 930 Wright v. Castles ...... 117 W.S. Carnes, Inc. v. Chesterfield County...... 167

Findex Page

Accrual of Causes of Action...... 748 Ad Damnum Clause ...... 434 Amendment of Pleadings ...... 476 Appellate System...... 50 Arbitration ...... 59 Bills of Particulars ...... 462 Bill of Review device ...... 732 Causes of Action ...... 693, 742 Charitable immunity...... 619 Choice of Law ...... 100 Choice of Law on Limitations ...... 824 Collateral Estoppel ...... 705 Commissioners in Chancery...... 148 Construction services statute of repose ...... 765 Continuous Treatment (limitations) rule ...... 792 Contract Limitations Period ...... 754 Corporations -- Serving with Process ...... 295 Correction of Decisions ...... 728 Counterclaims ...... 570 Court of Appeals...... 50 Court Structure...... 33 Craving Oyer ...... 455 Cross-claims ...... 576 Declaratory Relief ...... 230 Default ...... 367 Demurrer...... 447 Depositions...... 867 Draft Order process ...... 490 Discovery...... 842 Discovery Rule for Statute pf Limitations...... 780 Discovery Sanctions ...... 926 Dormancy and striking cases from the docket ...... 956 Equitable Claims-- Limitations and Laches ...... 816 Equitable Defenses ...... 116

Page Equitable Relief...... 114 Forum Non Conveniens...... 264 Forum Selection Clauses ...... 269 General District Court proceedings...... 34 General Jurisdiction...... 311 Guardians and Committees...... 212 Immunity from Service of Process...... 353 Interpleader...... 584 Interrogatories...... 886 Intervention...... 582 Intrafamilial immunities ...... 625 Joinder ...... 173, 223 Joint Tortfeasors ...... 503 Judicial estoppel ...... 726 Jury Trial ...... 1017 Juvenile & Domestic Relations District Court ...... 43 Law and Equity...... 100 Limitation of Actions ...... 742 Local Rules ...... 949 Long Arm Statute ...... 317 "Mass claims" litigations (6 or more)...... 962 Mediation...... 94 Medical Malpractice...... 531 Minors...... 212 Misnomer...... 194 Motions Practice rule...... 953 Necessary Parties...... 176 "Next Friend" pleading...... 221 Nonsuit ...... 968 Permissible Venue...... 241 Personal Injury Limitations Period...... 749 Personal Jurisdiction...... 321 Physical/Mental Examinations ...... 898 Pleas in Equity...... 136 Pleading ...... 411 Pleas in Bar...... 467

Page Preferred Venue...... 241 "Presence" for Jurisdiction Purposes...... 311 Pretrial Case Management and Orders...... 947 Privity ...... 718 Production and Inspection in Discovery...... 889 Publication Service...... 300 Recreational Facilities statute...... 612 Releases ...... 503 Requests for Admissions ...... 903 Res Judicata...... 690 Responsive Pleading...... 562 Rule Organization List ...... 31 Sanctions (General) ...... 651 Sanctions (Discovery) ...... 926 Scope of Discovery...... 843 Service of Process...... 281 Sovereign Immunity ...... 587 Special Pleas...... 467 Splitting Causes of Action...... 688 Standing...... 165 Statutes of Limitation ...... 742 Substitution of Parties...... 226 Summary Judgment...... 633 Supreme Court of Virginia ...... 50 Third-Party Claims ...... 577 Tolling of Limitations periods...... 803 Twenty-One Day rule...... 1007 Use of Discovered Material at Trial ...... 914 Venue...... 240 Verification of Pleadings...... 470 Vested Rights...... 830 Wrongful Death...... 198