The following is a common business occurrence: Party A demands payment from Party B to perform work on a project in which the two are engaged. Party B is not obligated to make the payment under the parties’ agreement, but does so anyway – albeit under protest and with a reservation of rights to sue for recovery of the payment later – in order to keep the project moving along While it would seem that Party B has acted prudently, that is not necessarily the case as illustrated by the recent decision of the Virginia Supreme Court in D.R. Horton, Inc. v. Board of Supervisors For The County of Warren. In Horton the Court applied Virginia’s “voluntary payment doctrine” to bar a real estate developer from recovering payment under the above scenario.
You Can't Be Greedy: Virginia Supreme Court Holds Employer Not Required to Pay Attorneys' Fees Incurred by Former Employee for Claims Other Than Breach of Severance Agreement
In Online Resources Group v. Lawlor, the Virginia Supreme Court held that, under Delaware law, an employer was required to pay the attorneys’ fees incurred by its former employee in litigation filed by the employee after he was terminated. The plaintiff in the case founded the employer in 1998, and served as its CEO and Chairman for over twenty years. Shortly after the company went public, the Board of Directors voted to remove him as CEO and also forced his resignation as Chairman of the Board and as an employee. After the company refused to pay him the amount he claimed to be owed under the terms of his severance agreement and two separate stock option plans, he filed suit in Circuit Court in Fairfax County asserting various causes of action, including breach of the severance agreement, breach of the two stock option plans, unjust enrichment, and wrongful termination, as well as declarative and injunctive relief.
The jury found for plaintiff on all of his causes of action except for wrongful termination, and awarded him compensatory damages of over five million dollars. Based on the attorney fee provision in the severance agreement, the jury also awarded him over two million dollars in attorneys’ fees incurred in litigating all of his causes of action.
A recent Pennsylvania case, Graystone Bank v. Grove Estates, LP, upheld the enforceability of a confessed judgment provision even in light of alleged inconsistencies. In most cases, a confessed judgment is a debtor’s statement signed prior to a default that a stipulated amount is owed to a creditor and permits bypassing certain legal proceedings. In Greystone, the debtor’s arguments that the confessed judgment should be set aside because the provision was not on the same page as debtor’s signature, the subsequent loan modification failed to restate the confession of judgment and attorney’s fees set at 10% of the principal balance of the loan were unreasonable -- failed to sway the Pennsylvania court, even on appeal. The court remanded the decision for a review of the reasonableness of attorneys’ fees, but otherwise, upheld the confessed judgment provision.
A bill to prohibit the installation of “advanced meters” by electric utilities in Virginia was set aside by the Virginia Senate on January 28, 2013. The Committee on Commerce and Labor vote to “pass by indefinitely” SB 797, effectively killing a proposal to restrict electric utilities from deploying new meters they believe are necessary to manage demand and improve resiliency of the electric grid.
Often described as “smart meters” the advanced meters are capable of two way communication, collecting consumer energy usage data from a home more often, and sending signals to consumers on energy pricing to allow them to reduce consumption during peak periods. Smart meters are a critical means for utilities to manage demand during peak energy usage periods and thereby prevent black outs. More than a third of U.S. households now have smart meters: the Institute for Electric Efficiency of the Federal Regulatory Commission estimates 40 million smart meters were installed by the end of 2012. Opponents of smart meters fear their energy usage data will be profiled to track their behavior.
Principles for the use and protection of consumer energy usage data, by utilities or by third party data analytics and home energy management services, have been established in law by several states and are codified in industry guidelines and best practices in the emerging market for energy data. Applications for consumer energy usage data are growing and require rigorous privacy protection by utilities collecting the data, and third parties using the data.
The Virginia Supreme Court Gives Some Guidance On What To Do - And Not To Do - In Challenging A Government Contract Award
A recent Virginia Supreme Court (VSC) decision offers important guidance – what to do and what not to do – for companies challenging a government contract awarded under the Virginia Public Procurement Act (VPPA), Va. Code §§ 2.2-4300 et See Charlottesville Area Fitness Club Operators Ass’n, et al. v. Albemarle County Board of Supervisors, et al., Nos. 110741 & 112233 (Va. Jan. 10, 2013). The decision is publicly available at the Virginia Supreme Court’s website.
Mortgagees who may find themselves with a need to foreclose on property secured by a mortgage, as well as potential purchasers of property at a foreclosure sale, should pay attention to the recent decision in King v. Virginia Housing Dev. Authority, No. CL-11-8895 (Norfolk (Va.) Cir. Ct., Sept. 6, 2012). King mitigates a risk that a foreclosure sale will be set aside due to failure to have a face-to-face meeting with the mortgagor, as may be required by HUD regulation 24 C.F.R. § 203.604(b).
Have you ever thought about “fudging” a little on properly notarizing a document? Perhaps you had the signature page sent ahead and begged a favor from a friendly notary, vouching for the absent party’s signature? A recent Delaware case where this occurred ended disastrously for the litigants. In Bessenyei, et al. v Vermillion, one of the plaintiffs was out of the country. The other plaintiff, a Pennsylvania attorney, convinced his legal assistant to notarize the absent plaintiff’s signature – on 3 different pleadings! The court did not take kindly to this lack of integrity and dismissed the case against BOTH parties with prejudice.
A recent decision out of the Eastern District of Virginia, Lorillard Tobacco Co. et al., v. California Imports, LLC, et al., analyzed the factors that a court in the Fourth Circuit must consider while determining the reasonableness of an attorney’s fee award. Lorillard had sued the defendants for unfair competition in violation of the Lanham Act and Virginia’s common law and dilution of Lorillard’s trademark; after a bench trial, the judge found in favor of Lorillard and held that the company qualified for an award of fees and costs under the Act.
In its opinion, the court cited to established Fourth Circuit precedent that in calculating an award of attorneys’ fees, a court must determine the “lodestar” amount (i.e., the reasonable hourly rate multiplied by hours reasonably expended) by applying twelve separate factors: 1) the time and labor expended; (2) the novelty and difficulty of the questions raised; (3) the skill required to properly perform the legal services rendered; (4) the attorney’s opportunity costs in pressing the instant litigation; (5) the customary fee for like work; (6) the attorney’s expectations at the outset of the litigation; (7) the time limitations imposed by the client or circumstances; (8) the amount in controversy and the results obtained; (9) the experience, reputation and ability of the attorney; (10) the undesirability of the case within the legal community in which the suit arose; (11) the nature and length of the professional relationship between attorney and client; and (12) attorneys’ fees awards in similar cases.
The Virginia Supreme Court Elaborates On Standard For Setting Aside A Settlement Agreement Based On Fraud
In Jared and Donna Murayama 1997 Trust v. NISC Holdings, LLC, No. 111377 (June 7, 2012) the Virginia Supreme Court (“VASC”) elaborated upon the reasonable reliance standard required to state a claim that a settlement agreement was procured by fraud.
In resolving an earlier case with defendants, plaintiff had entered into a settlement agreement over the sale of stock containing standard mutual releases of claims, including a release of all claims against the defendants “known or unknown arising at any before the execution of this [settlement agreement], whether based on: . . . fraud . . . or any other theory of recovery . . . and all claims which [the plaintiff] . . . may now have or may have had, arising from in any way whatsoever connected with . . . ownership [of the stock in question]. Nonetheless, plaintiff alleged in the new suit that it was duped into entering the agreement based on defendants fraudulent omissions and misrepresentations regarding the value of stock in one of the defendants that plaintiff held and was to sell back to defendants per the settlement agreement. The plaintiff’s alleged that
The Virginia Supreme Court Extends The Privilege Against Defamation To Certain Lawsuit-Related Statement Made Before A Lawsuit Is Filed
It is a venerable and well-settled proposition of Virginia law that statements which a party, among others, makes in a judicial proceeding that are “relevant and pertinent to the matter under inquiry” are absolutely privileged against actions on the basis of defamation. In a matter of first impression in Mansfield v. Bernabei, No. 111314 (June 7, 2012), the Virginia Supreme Court (“VASC”) extended this proposition by holding that the privilege applies to communications by counsel threatening suit made before an action actually is filed. .
In Mansfield the defendants, a party and his counsel, had circulated a draft complaint to various entities named as defendants in the draft complaint. ,The draft complaint was stamped “Draft – For Settlement Purposes Only,” and it was appended to demand letter from counsel advising the entities named as defendants in the draft complaint to contact counsel by a date certain, else she “will have no choice but to initiate formal legal action.” About a week thereafter, counsel filed a complaint in federal court
A Recent Federal Ruling Potentially Provides Telcos With Additional Leverage When Seeking Redress From Persons Who Damage Their Facilities In Virginia ROWs
The decision by the United States District Court for the Eastern District of Virginia in Level 3 Communications, LLC v. William T. Cantrell, Inc., No. 3:12-CV-081-HEH (May 4, 2012), affords leverage to telecommunications companies seeking to obtain relief from persons who damage or interfere with their facilities located in Virginia public rights of way (“ROW”).
The plaintiff in the case, a fiber optics-based telecommunications company, had buried its fiber optic cables in a Virginia state highway ROW with permission from the Commonwealth. When it received notice from Miss Utility that the defendant, a contractor, was going to excavate in the area of the cables, the plaintiff marked the road to show the cables’ approximate location. Plaintiff alleged in the complaint that
Virginia Supreme Court Ruling Denies Real Property Taxation of Non-Exempt Entity for Taxes Associated with an Exempt Entity's Ownership Interest in Property Owned as Tenants in Common.
The Virginia Supreme Court recently considered whether a municipal corporation has the authority to impose additional real property taxes against a tax paying entity which owns real property as a tenant in common with a tax exempt entity. The court held that there is no such authority.
The City of Richmond sought to impose real property taxes (both prospectively and retroactively) on two properties that SunTrust Bank, a tax paying entity, and Richmond Redevelopment and Housing Authority (“RRHA”), a tax exempt entity, owned as tenants-in-common. As a tax exempt entity, RHHA did not pay real property taxes on its interests in the properties. Agreements between SunTrust and RHHA allowed SunTrust to use the entirety of the properties without paying rent to RHHA for use of its undivided interests in the properties. The City contended that it had the authority to tax SunTrust for RHHA’s ownership interest because:
i. pursuant to the operating agreements, SunTrust had the exclusive right to use and possess the properties as if it were the fee simple owner;
ii. SunTrust did not use the properties for a "public purpose”; and
iii. leasehold interests exempt from taxation of the owner are assessed to the lessee and the practical effect of the agreements between SunTrust and RRHA was to create a leasehold interest in RHHA’s undivided property interest.
The court held, however, that, as a tenant in common, SunTrust has the right to use and possess the properties without any agreement with RRHA; no Virginia law imposes a “public purpose” requirement to maintain RHHA’s exempt status; and the arrangement between SunTrust and RHHA do not constitute a leasehold because the parties are tenants-in-common. Consequently, the City’s arguments did not prevail. Throughout its opinion, the court indicated that holding title to the properties as tenants-in-common, rather than as joint venturers, was a significant factor in its decision.
Virginia Supreme Court Holds Private Cause of Action Permitted Under State Consumer Real Estate Settlement Protection Act
Last week, in First American Title Insurance Co. v. Western Surety Co., the Virginia Supreme Court ruled that a title insurance company, First American Title Insurance Co., could maintain a private cause of action based in common law against its surety company, Western Surety Co., for Western’s breach of a surety bond required under the Virginia Consumer Real Estate Settlement Protection Act (“CRESPA”), Va. Code Ann. § 55-525.16, et seq.
The Virginia Supreme Court first held that CRESPA did not afford First American a private right of action to bring suit under the statute itself. However, the Court noted that CRESPA did not expressly abrogate a common law cause of action for parties injured by a breach of a required bond. As a consequence, the Court held that in Virginia, a statutory bond that expands liability from the statute requiring the bond, like CRESPA here, was still enforceable as a “common law voluntary obligation.”
Virginia businesses and employees are eagerly awaiting rulings from the Virginia Supreme Court on two cases that it has heard or is preparing to hear concerning the enforceability of non-competition agreements between employers and employees. The results of these cases should provide businesses and employees in Virginia with greater clarity on the scope of enforceable non-competition agreements. The Virginia Supreme Court heard the first case, Home Paramount Pest Control Cos. Inc. v. Justin Shaffer, et. al., earlier this week. That case addresses restrictions in an employment agreement which prohibit a former employee from engaging in certain specific competitive activities, including soliciting customers of the former employer, within a defined geographic area. The second case, BB&T Insurance Services, Inc. v. Thomas Rutherfoord, Inc., et. al., for which a hearing date has not yet been scheduled, also involves the solicitation of the former employer’s customers. Unlike Home Paramount, this case addresses the fact that the post-employment non-competition covenants were provided as a condition precedent to the employer’s purchasing the employee’s business. We will keep you posted on the decisions in these cases and their impact on non-competition agreements in Virginia.
A recent opinion by the Virginia Supreme Court reminds us of the basic – but important – principle of contract law that repudiation can be a defense to breach of contract.
Jennifer Kasman contributed to this post.
A recent Virginia Supreme Court case held that a real estate developer may be subject to claims under the Virginia Consumer Protection Act (VCPA) and a tort claim for fraud in the inducement in addition to a breach of contract claim for breach of a sales agreement. The holding of this case, which overturned the trial court’s order dismissing plaintiffs’ compliant, is a cautionary tale for real estate developers.
In the case, all of the plaintiffs had signed real estate sales contracts with the defendant developer, Concord, for the purchase of new-construction condominiums. In those contracts, Concord promised that the condos would be furnished with a specific type and size of hardwood flooring, subject to substitution of “substantially equivalent materials and finishes.” The plaintiffs did not discover until after closing that Concord had installed a different-sized “prefabricated engineered hardwood,” which they argued was not substantially equivalent to the promised flooring.