The VLW Blog

Taboada v. Daily Seven, the premises liability case that greatly expanded the potential liability of hotel operators, has been settled. The case is perhaps better known for the intemperate petition for a rehearing filed by a Roanoke attorney that earned him a contempt citation and a fine from the Virginia Supreme Court.

The Roanoke Times has an excellent account of the case and its significance with links to the Supreme Court opinions and an earlier article.

Defense lawyers are accustomed to the aggravation of a nonsuit. They know what it’s like when plaintiffs apply the brakes on the eve of a scheduled trial.

The shoe was on the other foot in a case handed down today by the Supreme Court of Virginia. In McNally v. Rey, defense attorney John McNally’s corporate client filed a bankruptcy petition the day before the client was set to be in Norfolk Circuit Court to defend a contract action. Homeowners had sued the business on a contract to remove lead-based paint from their home.

When lawyers for both sides appeared before Norfolk Circuit Court Judge Chuck Griffith, who recently lost his bid for another eight-year term, the defense lawyer informed the court about the bankruptcy petition. The plaintiffs’ lawyer got mad. He promptly asked Griffith for attorney’s fees and costs, dismissal of the defendant’s counterclaim with prejudice and, for good measure, a bench warrant against the client for unspecified criminal charges.

A month later, without holding a hearing, Griffith ordered sanctions totaling just over $14,000 against McNally.

A unanimous Supreme Court said that was an abuse of discretion. Writing for the court, Chief Justice Leroy Hassell said McNally had no obligation to inform the plaintiffs’ lawyer about a possible bankruptcy filing, and that McNally’s filing of a witness and exhibit list, required by the trial court’s own pretrial order, did not violate Va. Code § 8.01.271.1.

Once again, when trial judges and lawyers convene, the talk turns to Benitez, the Virginia Supreme Court sanctions case. The venue this time? A panel of circuit court judges at the Virginia Trial Lawyers Association annual meeting on March 28, moderated by Arlington Circuit Court Judge Joanne Alper.

The subject is irresistibly personal.

“Sanctions motions are different and more difficult because they’re personal,” said Albemarle County Circuit Judge Cheryl Higgins. Basically, “you want a finding that the other attorney is a jerk.” You’ve got to use “e-mail, faxes, voice-mail, letters,” all kinds of lawyer-to-lawyer communications to prove your point.

Higgins is seeing more sanctions motions, but she cautions against filing just because you think you’ve got grounds.

Some lawyers see a flimsy claim or defense and fire off a “kiss my sanctions” motion, without any cite to authority. Higgins, who took the bench in Albemarle County in 2007, said “you would not believe what I’ve read in the last year.”

Higgins said it’s important to “think strategically before you file a motion for sanctions. What is it you’re trying to accomplish for your client,” given the time and expense of pursuing a sanctions motion.

“When you bring a sanctions motion, you’re putting your credibility on the line,” Alper said.

What about giving opposing counsel a chance to back down? The consensus among this group, which also included Richmond Circuit Judge Brad Cavedo, seemed to be it’s not necessary under the current statute, but it might be as a matter of professional courtesy.

In practice, “you try to work it out,” said Hampton Circuit Judge Wilford Taylor Jr. “We don’t want to sanction lawyers.”

Word is, a Boyd-Graves committee is looking at drafting a “safe harbor” provision for Va. Code § 8.01-271.1, similar to the one in Fed. R. Civ. P. 11, that requires a warning shot over the bow before a sanctions motion is filed.

Handed down a year ago, the decision in Ford Motor Co. v. Benitez was one of the top legal news stories in 2007. In Benitez, the Supreme Court of Virginia upheld a $2,000 sanction against a defense attorney who, after discovery and a nonsuit in a products liability case, continued to press affirmative defenses with no basis in fact or law.

The case left a lot of lawyers feeling like they were going to be poised between a waiver and a sanction, fearful of forfeiting an unpleaded claim or defense on the one hand, but afraid of sanctions for doubtful claims or defenses, on the other.

The balancing act continues.

The Benitez case was topic number one yesterday at the circuit court session of the Henrico County Bar Association Bench-Bar Conference at the courthouse.

The Henrico County bench thinks there may be Benitez-based sanctions motions on the horizon.

“I haven’t had one yet, but I can see it coming,” said Judge Al Harris. Both Harris and Judge Catherine Hammond said the nonsuit in Benitez was significant, but they also pointed to the mandatory language in Virginia’s sanctions statute, Va. Code § 8.01-271.1.

“Once the motion comes before the court, if the moving party establishes the failure to have a factual basis or legal basis, the court doesn’t have any choice,” Hammond said.

“The Supreme Court is very clear, it’s a ‘shall’ situation,” Harris said.

Judges on the panel said possible sanctions scenarios could include a contributory negligence defense asserted against a passenger injured in a car crash (a la Benitez), or a plaintiff’s request for punitive damages in a contract case, or a request for attorney’s fees and costs in a tort suit.

“The Supreme Court is placing a great burden on counsel to plead and develop the case,” said Judge Burnett Miller.

Several judges agreed that if pleadings are limited, lawyers likely will have more latitude in discovery.

The general district court session dealt primarily with collections work and the need for lawyers to clean up their cases ahead of time in order to streamline presentations in court.

But one GDC judge couldn’t resist getting in a dig on civil remedial fees.

General District Court Judge Neil Steverson said it was “good to see the circuit court judges over here getting CLE hours, since we were the ones who said civil remedial fees were wrong, and now the General Assembly is agreeing.”