Holographic Wills in Virginia: Schilling v. Schilling

Wills (or, more broadly, testamentary instruments) are special: they are governed by a different set of rules than other legal documents. This reality was highlighted in Schilling v. Schilling (June 10, 2010), in which the Supreme Court of Virginia (a) examined the General Assembly's amended statute regarding holographic wills and (b) reiterated the rule that a will "speaks" (or takes legal effect) on the date of the testator's death, not the date of the will's execution. Most legal documents, on the other hand, become effective upon the date of their execution by the party or parties.

You can read Justice Mims's opinion in Schilling, here.

------------------

 
First, some background on holographic wills:
 
Generally, Virginia law requires that for a will to be valid, it must be signed in the presence of two competent witnesses, who also must sign the will in the presence of the testator (the requirement of witnesses is in addition to other requirements including those governing the age and competence of the testator).
 
There is an exception for a will that is entirely in the testator's own handwriting.  Such a will is known as a holographic will and is valid even without any witnesses (though there is a requirement that two witnesses who are familiar with the testator's handwriting testify that the alleged will is authentic).
 
Until 2007, the Virginia statute governing holographic wills, Code of Virginia Section 64.1-49 (you can read the text here), mandated that a holographic will be "wholly" in the testator's handwriting.  If the testator's relative or friend had added certain words or sentences to the document, those "extra" words or sentences were not deemed to be part of the will -- they were excluded by Section 64.1-49.
 
In 2007, however, Section 64.1-49.1 (the text is here) modified the rule slightly, so that additions by others are now permitted (and read as part of the will), if a proponent of the will can establish by clear and convincing evidence that the testator intended the document - including the extra words - to constitute his or her will.

 

-------------

 
The question arose in Schilling of how to interpret a holographic will that was signed prior to the 2007 law but not probated (because the testator did not die) until after enactment of the 2007 law. 
 
In particular, Ms. Schilling's son had added certain important words to the will that was otherwise entirely in her handwriting (and which left her entire estate to the same son!), and certain of her other heirs argued that those portions of the will should be invalidated, since it was signed prior to the 2007 law.

-------------

The Supreme Court of Virginia reversed the Circuit Court for the City of Hampton (which had granted the protesting heirs' demurrer), holding that Ms. Schilling's will did not take legal effect until her death on September 23, 2008.

The Supreme Court's decision in Schilling illustrates the rule that makes wills special among legal documents:  whereas most documents are governed by the laws in effect at the time they are signed, wills are governed by the laws that are effective as of the date of death.

The Charlottesville YMCA at the Supreme Court

For me, one of life's "mini disappointments" is learning that a court has decided an interesting legal question on procedural rather than substantive grounds.

To put it differently: sometimes I get bummed-out when a court resolves a dispute based on the procedural rules (which are often quite technical) rather than evaluating the underlying, substantive claims of the two parties.

(An aside: another mini disappointment, rooted in childhood snow-days, is a predicted snowstorm that fails to materialize.  We had one such "non-storm" last week in Charlottesville, and I felt like a disappointed 7-year old boy all over again.  My fingers are crossed that we get at least one heavy snow during the winter of 2013).

But back to the courts:

I have followed with curiosity the long-running effort to build a YMCA in Charlottesville's McIntire Park. 

(Aside #2: I belong to ACAC and rank it as one of my absolute favorite Charlottesville institutions (along with Bodo's, the Charlottesville Ten Miler, Timberlake's, and Mint Springs). I also think that our community would benefit significantly from a central YMCA facility. I'm uncertain at this point whether I think McIntire is the best location.)

When the YMCA was selected by the Charlottesville and Albemarle governments to build and lease a facility in McIntire Park in 2007, a group of for-profit health clubs filed a lawsuit against the local governments. 

---------------------

 

Essentially (and pardon the over-simplification), the other health clubs claimed that the YMCA received an unfair "leg up" from the City and County because of its non-profit status -- in particular, the clubs said that Charlottesville and Albemarle did not put the McIntire project out for competitive bids using the normal public procurement process.

---------------------

The case is Charlottesville Area Fitness Club Operators Association v. Albemarle County Board of Supervisors et als.

The Albemarle County Circuit Court dismissed the clubs' claims, and the clubs appealed to the Supreme Court of Virginia.

I was very curious to see how the SCV would evaluate the case. Alas, Justice Goodwyn's January 10 opinion (the text is here) was something of a let-down.

---------------------

 

The Court held that it could not evaluate the legal rights of the for-profit clubs vis á vis the McIntire Park project because the Fitness Club Operators Association did not have standing to bring a claim against the two local governments. The Fitness Club lacked standing under either Code Section 15.2-953 or the Virginia Public Procurement Act:

The Fitness Clubs are strangers to the Board's negotiations with the YMCA, including its decision to make a $2.03 million payment to the YMCA and enter into the Use Agreement.  

[The relevant Virginia statute] provides no right of action to a third party to challenge a locality's appropriation [under these circumstances].

I would paraphrase the Court's analysis this way: the Fitness Clubs do not have the right, under Virginia statutes, to a court determination of whether their rights were violated. 

Perhaps. But a more satisfying analysis would have reviewed the substance of their claims.

---------------------

The majority's analysis is particularly problematic with respect to the Virginia Public Procurement Act (the VPPA).

The majority says that the Fitness Club cannot bring a claim under the VPPA because they "do not allege that the VPPA provides a mechanism for them to protest an award of a public contract and they have no remedy independent of the VPPA."

This reasoning is conclusory (or circular): Charlottesville and Albemarle determined that the McIntire project was not subject to the Virginia Public Procurement Act (which would have mandated a different bid process), therefore the McIntire project was not subject to the Virginia Public Procurement Act.

Justice Mims has the better of it in his dissent:

The VPPA provides no internal procedures for determining whether it applies to a contract (emphasis in original). Yet the General Assembly clearly intended the VPPA to apply to those contracts defined in Cod Section 2.2-4303(A).  

The conclusion that the General Assembly provided no mechanism to adjudicate a dispute over whether the VPPA applied to a procurement action, simply because the VPPA does not contain any, leaves the VPPA unenforceable where a public body determines by fiat that the VPPA does not apply.   

That is an untenable result in face of the clear statutory expression of the legislature's intent that the VPPA's procurement procedures be mandatory, rather than voluntary.

Note that Justice Mims does not opine whether the for-profit clubs have a valid complaint -- merely that they have the right to their day in court on the substance, rather than just the rules. 

And now it's time to contemplate legal theories upon the treadmill...

Virginia's Rule of Professional Conduct 4.2 -- The Ten Second Rule?

During today's monthly luncheon of the Charlottesville Albemarle Bar Association, Ron Tweel mentioned a very interesting disciplinary case.

The case, Zaug v. Virginia State Bar, is currently pending before the Supreme Court of Virginia.

----------------

The Zaug case deals with Virginia Rule of Professional Conduct 4.2.

Rule 4.2 governs communication between a lawyer and a person who is represented by a different lawyer:

In representing a client, a lawyer shall not communicate about the subject of the representation with a person the lawyer knows to be represented by another lawyer in the matter, unless the lawyer has the consent of the other lawyer or is authorized by law to do so.

According to a summary of the Supreme Court hearing in the Virginia Lawyers Weekly (here), attorney Zaug spoke on the telephone for less than 60 seconds with a plaintiff in a medical malpractice case in which Zaug's firm represented the defendant. 

Zaug has stated that once she realized who was on the telephone, she told the plaintiff that she could not help her and she needed to call her own lawyer.

A three-judge panel stated that Zaug did not end the call quickly enough and therefore violated Rule 4.2. The panel upheld a district disciplinary committee's “dismissal de minimis” (a finding that a lawyer has engaged in misconduct "that is clearly not of sufficient magnitude to warrant disciplinary action" -- but misconduct nonetheless).

VSB Counsel supported the panel's decision, arguing before the Supreme Court that Zaug's telephone call should have lasted no more than ten seconds, rather than sixty seconds.

The rules of ethics are central to our profession.  That said, I am surprised that the VSB took this position. I fear that they are advocating for a standard that may be impossible to meet.

---------------

I think you would be hard pressed to find a lawyer who has not at some point been called by an individual, on the other side of a transaction or claim, who is represented by another attorney.  The prohibition against communicating with those represented by other lawyers is strongly emphasized in law school and continuing education seminars, so when it happens you end the call as fast as you can.

The couple of times it's happened to me, I ended the call and then e-mailed the other attorney, informed him or her of the call, and asked that he inform his client not to communicate with our firm again. I understand that Ms. Zaug did the same.

----------------

Ten seconds is a really short period of time, particularly when you spend a significant part of the day answering the telephone.  Picking up the phone multiple times in a row, it can take some time to even process who is calling, let alone why he or she is calling. 

(Maybe I am just getting older, but I feel like all of my reactions/responses are slower than they used to be. Perhaps that is part of my objection to the VSB's position.)

I do not know all the facts of this case, but I think that if Ms. Zaug's position is that she ended the call as soon as she realized the nature of the call, then her response should satisfy the requirements of Rule 4.2. 

The alternative seems to be a de facto requirement that you have to hang up the telephone immediately (or even pre-emptively) -- or face the possibility of the Bar second-guessing your ethics.

----------------

Interestingly, some of the Supreme Court justices stated that it might be rude to abruptly hang up the telephone, raising the spectre of a conflict between the twin goals of ethics and civility.

I will be very interested to read the Court's opinion.

Interfering (Or Not) With an Easement: The Supreme Court of Virginia's Decision in Piney Meeting House Investments, Inc. v. Hart

When a property owner conveys an easement, he or she gives the easement-holder the right to use the property.

The property that is subjected to the easement is called the servient tenement: it "serves" the easement-holder. 

------------

Notwithstanding the legalistic terminology -- and even though Halloween is fast-approaching -- don't let easements scare you. They are more common than you'd think, and they usually "work". In Albemarle and the surrounding counties, many properties are subject to access easements: a family has the legal right to cross their neighbor's property, via a driveway from the public road, even though all or a portion of the driveway is not actually located on the family's property. 

Most of the time, the easement is used without problems arising from either side.

------------

Easements can be created in several ways, and they need not be in writing.  For instance, continuous and adverse use of another person's property can give rise to a prescriptive easement (for a discussion of prescriptive easements, see our post about Hafner v. Hansen, here).

Usually, however, easements are created by a written document that is recorded in the Clerk's Office, in order to put the world on notice of the parties' rights and obligations related to the property.

------------ 

In Piney Meeting House Investments, Inc. v. Hart (June 7, 2012), the Supreme Court of Virginia examined the limits to which the owner of the servient tenement can interfere with the rights of the easement holder.  You can read Justice Mims's opinion here.

A sunrise on Lake Anna

Mr. and Mrs. Hart owned a parcel on Lake Anna. Their property included an access easement across land owned by Piney Meeting House.

According to the Harts, Piney Meeting House obstructed the easement by placing and/or installing a number of items within the easement: an electric box, a generator, a well, a propane tank, trees and mulch.  The crux of the opinion focuses on two of these items: the well and the propane tank.

A commissioner in chancery appointed by the Spotsylvania County Circuit Court determined (1) that the below-ground portion of the well did not unreasonably interfere with the Harts' use of the easement (so long as Piney Meeting House moved the above-ground portion of the well) and (2) that Piney Meeting House should be given an opportunity to satisfy the court that the propane tank's ground-level cap was strong enough to withstand automobile traffic.

The Circuit Court judge, however, rejected the commissioner's recommendations regarding the well and propane tank, and instead enjoined Piney Meeting House "from placing anything within the easement [above-ground or below-ground] which would in any way affect the Harts' use of the entire width of the easement." (emphasis added)

------------

 

The Supreme Court reversed the Circuit Court -- thus handing a victory to servient tenement owners throughout the Commonwealth.

In his opinion, Justice Mims states that the Circuit Court took a too-restrictive reading of the limits on the servient tenement's use of the easement property:

"Our cases make clear that the owner of a servient estate may still make reasonable use of land burdened by defined width ... An encroachment that does not narrow the width of an easement or unreasonably interfere with its use is not a material encroachment."

Justice Mims proceeds to state that the question of "unreasonable interference" is best left to a fact-finder (rather than a judge). 

Typically a jury would serve as the fact-finder, however the Spotsylvania Circuit Court had delegated the fact-finding role to the commissioner-in-chancery.

The commissioner-in-chancery had examined the evidence and determined that the well and propane tank would not unreasonably interfere with the Harts' use of the easement.  Piney stands for the proposition that once that determination was made, it should only have been disregarded by the judge in the face of [clear] contradictory evidence.

------------

 

The take-away from Piney is that the limits to which a servient tenement owner can interfere with an easement are highly dependent on the facts and circumstances of the particular easement.  That said, easement owners should not make too broad a claim about their servient neighbor's inability to use the easement property, particularly if the neighbor can produce evidence that the alleged impediment does not completely obstruct use of the easement.

 

Now it's time to take a break from the law books and choose the perfect pumpkin!

Trees, Roads, and Duties to Travelers: The Supreme Court of Virginia's Decision in Cline v. Dunlora South, LLC

Several clients have asked me whether property owners have any legal duties related to public roads that border their property. 

Like many of the questions that clients come up with, this one is not easy.

---------

The Supreme Court of Virginia provides some guidance in its recent opinion, Cline v. Dunlora South, LLC (June 7, 2012). You can read Justice Goodwyn's opinion here. 

Albemarle County was the tragic setting for the events in Cline.  Mr. Cline was driving along Rio Road when a tree fell onto his car. He was seriously injured, and he sued several parties including Dunlora South, LLC, the owner of the property adjacent to Rio Road on which the tree was located.

-----------

Mr. Cline alleged that Dunlora South, LLC, as the owner of the property, owed a duty to him -- as a traveler on Rio Road -- to prevent trees from falling onto the road.  The Circuit Court for Albemarle County dismissed Cline's complaint and the Supreme Court of Virginia affirmed Judge Peatross's decision.

----------

Cline argued the property owner owed a duty to him in light of of the Court's 2007 decision in Fancher v. Fagella. 

In Fancher (2007), the Court held that a property owner can be held liable for damage caused by a tree to a neighboring owner's property.  In Cline, Justice Goodwyn refines the rule to state that an owner may be liable for property damage caused by trees, but not for personal injury.  The Court's rationale appears to be that a general duty to keep dead or rotten trees from falling onto roads would be unduly burdensome to landowners.

Instead, the duty of landowners is limited to avoiding taking actions that would increase the danger of personal injury to travelers on the road: "The duty owed by adjoining landowners is to refrain from engaging in any act that makes the highway more dangerous than in a state of nature or the state in which it has been left" (emphasis added).

-----------

A critic of the Cline decision might reasonably ask why the Court imposes on landowners a greater duty to protect buildings from trees (per Fancher) than to protect people from trees (per Cline).

I thought Justice Lemons had the better argument in his dissent. Justice Lemons argued for a fact-based inquiry, under which a court would determine whether a property owner knew or should have known about the potential of a tree injuring someone using the adjoining road.  An owner in a suburban or urban area, for instance, might more reasonably be expected to cut down a potentially dangerous tree than would the owner of a large parcel in a rural area with sparsely-traveled roads.

Since Justice Lemons's view did not prevail, the takeaway from Cline is that property owners' duties with respect to trees that border public roads is extremely limited.

The Fourth of July is approaching!  Where will you celebrate in 2012?  Stanardsville? Scottsville? McIntire Park?  Or just in your own backyard?

A Conservation Easement Lawsuit in Caroline County

An overhead photograph of Moss Neck Manor

Moss Neck Manor is a historic home in Caroline County, Virginia. 

Stonewall Jackson maintained his headquarters there during the winter of 1862-1863. Jackson famously refused to sleep inside, protesting that the manor house was "too luxurious for a soldier, who should sleep in a tent."

---------

150 years later, the Manor is in the news again.   

---------

Rusty Dennen at the Fredericksburg Free-Lance Star reports (here) about a lawsuit stemming from a proposed conservation easement on the Moss Neck property.

According to Dennen, Moss Neck Manor Plantation Inc., the owner of some 1,200 acres around the manor, filed suit in Caroline County Circuit Court this March.

The defendants are the Virginia Outdoors Foundation and The Conservation Fund.

---------

I have not read the complaint (sadly, the majority of circuit court civil filings in Virginia are not available online), but my understanding from the Star is that Moss Neck Inc. alleges that it relied on the VOF and The Conservation Fund in structuring a sale of the property based on an agreement to donate a conservation easement to the VOF. 

Moss Neck Inc. understood that the easement would contain a particular set of terms. 

The claim states that one or the other of the defendants required more stringent terms just prior to closing, causing the transaction to fall through. Moss Neck Inc. alleges fraud, conspiracy and breach of contract by the two defendants.

Dennen reports that the Virginia Attorney General's Office will defend the VOF on grounds of sovereign immunity (the VOF is a state agency) and will also argue that the VOF was not a party to any contract. The Conservation Fund will also argue that the claim is invalid.

I will definitely be curious to track this litigation.

This is a painting of Stonewall Jackson at Moss Neck Manor by artist Mort Kunstler.

And what about you?  Are you a "tent person" like General Jackson, or are you ok with sleeping in a manor house?

Private Roads and Prescriptive Easements: The Supreme Court of Virginia's Decision in Dykes v. Friends of the CCC Road

In the midst of an abnormally warm winter (there was finally a scattering of snow over the weekend), the Supreme Court of Virginia has issued its first batch of opinions for 2012.

The Court's decision in Dykes v. Friends of the CCC Road (January 13, 2012) caught our attention. You can read Justice Koontz's opinion here.

-------------

Property law in Virginia generally distinguishes between private roads and public roads. 

The effect of a road being classified as "public" is what you'd expect: the public (taxpayers) are responsible for paying to maintain the road. 

Private roads, on the other hand, are maintained by the affected property owners, either by informal agreement or in accordance with the terms of a road maintenance agreement recorded in the County courthouse.

Another important distinction relates to the right to use a road: in the case of a private road, the right to drive (or walk, or bicycle) on the road can be limited to the owners of property served by the road. Public roads are -- you guessed it -- open to the public.

Road-building circa 1935

Dykes v. Friends tells the story of a Highland County road built in the 1930's by the Civilian Conservation Corps. 

Several of the property owners along the road erected gates that blocked the public's access to the road, and a group called "Friends of the CCC Road" filed a lawsuit requesting an injunction to compel the removal of the gates (perhaps the friends had friends at the far end of the road, and the gates made friendship more difficult?).

-----------

The Circuit Court of Highland County determined that the road had not been expressly or impliedly dedicated for public use. There were no records of the road's adoption into the County's road system, and the County had never paid for its upkeep.

Nevertheless, the Circuit Court granted the injunction compelling the removal of the gates.  The Circuit Court reasoned that a public right-of-way can be created over private property by virtue of the government's recognition of "long and continuous use" by the public. 

According to the Circuit Court, "recognition" can occur even though the public cannot satisfy the normal prescriptive easement requirement of exclusivity (more on this point below).

-----------

The Supreme Court of Virginia reversed the Circuit Court. 

Justice Koontz starts by stating that "long and continuous use" of a road by the general public, plus government recognition, do not, in and of themselves, prove an implied dedication of the road to public use. Private property enthusiasts will cheer Justice Koontz's strong words: "The law of this Commonwealth simply does not allow for a conversion of private property to public property solely by public use." 

------------

Justice Koontz then turns to the interesting theoretical question of whether the public can, over time, acquire prescriptive rights to a road.

A refresher on prescriptive easements: In order to establish the existence of a prescriptive easement, an owner must prove that his use of another person's property satisfies each of the following tests:

1. The use must have been adverse and under a claim of right.
2. The use must have been exclusive.
3. The use must have been continuous for a period of at least 20 years.
4. The owner of the servient estate (the property over which the easement is alleged to run) must have had knowledge of it and acquiesced in its use.

In Dykes v. Friends, the general public may well have been able to satisfy requirements #1, 3 and 4 above (adverse use of the road, with the knowledge of the owner, for a period of 20+ years).

But can the general public ever really claim "exclusive use"?  Isn't the whole idea of "public" the opposite of "exclusive"?

-----------

Justice Koontz solves the riddle by stating that past Supreme Court decisions have alluded to the public acquiring the right to use a road "by prescription", but only in circumstances when the government has taken an affirmative action to accept the road as public:

While on occasion we have discussed the conversion of a private road into a public road 'by prescription,' it has always been clear in the context of those cases that the elements of prescription were being used to establish that an implied dedication of the property had been made.  

As we explained in Tazewell County v. Norfolk & Western Railway (1916), 'when the dedication is implied from the long and continuous use by the public for the prescriptive period of twenty years, and there has been acceptance by competent authority, title to a right-of-way for a public road may be obtained by prescription' (second emphasis added).

Since the Supreme Court found no evidence of an affirmative "acceptance" by Highland County or another government authority, the CCC road remains private and the property owners retain the right to install the gates.

----------

The Court's opinion in Dykes v. Friends seems right. It seems fair that a private road can become public over time, but not without some kind of overt action by the government authority. Without the requirement of overt action, evaluating the facts could become too tricky for even our most discerning jurists.

And now that you are up to speed on the latest from the halls of justice, it's time for a snow dance to see if we can't get a little bit more winter around here...

Lewis and Clark's Expedition to the Supreme Court

Charlottesville's own Meriwether Lewis will take center-stage on this year's docket at the United States Supreme Court.

In PPL Montana v. Montana, the Supreme Court will examine the question of whether portions of three Montana rivers are owned by a power company (PPL Montana) or the state itself.  In addition to the legal ramifications, there is a significant sum of money at stake: if the state owns the riverbeds, then the company owes the state back-rent of $53 million.

The case turns on whether the rivers are "navigable".

--------

Supreme Court precedent holds that the riverbeds of rivers that were navigable at the time of statehood are owned by the states. 

Now, the Court must decide whether the existing rule applies to portions of rivers that were navigable (Montana's position) or only if the entire river was navigable (the power company's position).

-------

Meriwether Lewis is relevant to the dispute because his journals from the watershed expedition of 1803 (pun intended?) include several entries describing the Great Falls of the Missouri -- and the extent to which the waterfalls inhibited the expedition's progress (thereby making the river unnavigable).  Interestingly, attorneys on both sides of the case argue that Lewis's journals support their position.

Robert Barnes's article about the case, in this morning's Washington Post (A River Runs Through It, and So Might Lewis and Clark), is here.

-------

And speaking of Messrs. Lewis and Clark: the Lewis and Clark Exploratory Center (their website is here) has broken ground on its new building at Darden Towe Park, and the Center anticipates the building will open in 2012. 

The Lewis and Clark Statue at the Intersection of Main and Ridge Streets

Public Nuisance in Virginia

A nuisance occurs when a property owner unreasonably uses his property in a manner that "substantially interferes" with the enjoyment or use of another individual's property. 

A nuisance differs from a trespass because the nuisance-creator does not physically enter onto the other property owner's land. Nuisances include loud noises that unreasonably disturb a neighbor and foul smells that do the same: neither the ruckus nor the stench physically (or bodily) enters the neighbor's property, but they nevertheless interfere with the neighbor's ability to enjoy his property.

-------

In Virginia, most nuisances are private nuisances, which means that one landowner brings a civil claim against another landowner.  In these claims, the general public's interest is not represented by the Commonwealth attorney participating in the lawsuit.

However, there is a provision in the Code of Virginia (Section 48.1, accessible here) that enables five citizens to petition a court to bring a public nuisance claim against a property owner whose actions negatively impact a broader swath of the public.

When a petition is brought under Section 48.1, the judge summons a grand jury to investigate the complaint and, if sufficient evidence of a public nuisance is found, then the nuisance-creator may be held liable and fined up to $25,000.00.

----------

Now comes a fascinating front-page Washington Post story about a group of church-goers in Fairfax County who have petitioned under Section 48.1. The petitioners allege that a neighboring golf range has created a public nuisance by virtue of the 2,637 golf balls (!) that have crossed onto the church's property, in some cases damaging property and injuring individuals. 

You can read Justin Jouvenal's account of the dispute here. 

According to Jouvenal, the range owners contend that they have (1) taken reasonable steps to prevent the golf balls from leaving their property and (2) cooperated with the church in attempting to devise mutually agreeable solutions.  Nevertheless, the grand jury concluded that there is a reasonable basis for a charge of public nuisance, and the case could head to trial in January.

---------

If the matter does go to trial, it will be interesting to see whether a judge concludes that the 100+ foot protective netting installed by the golf range is a sufficient accomodation to defeat the claim of nuisance.

The American Society of Legal Writers' Supreme Court Interviews

The American Society of Legal Writers recently published a fascinating series of interviews with eight of the nine Supreme Court Justices. You can link to the full interviews at the Society's website "Scribes" (here).

The Scribes interviews are a great opportunity to peer inside the heads of the Justices. I particularly enjoyed the verbatim transcriptions; this allows the reader to trace the Justices' thought-processes as they think about the art (and science) of rhetoric and prose.

One theme that arises in the interviews is the Justices' preference for written and oral arguments that are (1) concise and (2) clear. This would seem to be stating-the-obvious, but in a profession where a seemingly simple contract can stretch to 10 or 20 pages of legalese, the advice is well-taken.

----------

Here are some highlights:

When asked if grammatical errors bother him, Chief Justice Roberts analogized to listening to music and hearing a misplayed note:

I’m not going to stop in the middle and say someone’s used a wrong bit of grammar. No ... But it’s like music. If you’re listening to music and somebody hits the wrong note, it kind of detracts from it, and you hear it. It’s the same way there. If they’re making a point, and they just . . . You notice it, and if you notice it, you’re not noticing the argument; you’re noticing the words. And that’s unfortunate.

Justice Ginsburg thinks everyone would benefit from minimizing the legalese:

Any profession has its jargon. The sociologists have lots of fancy words, and some of them think somehow that puts them on a higher plane. I can’t bear it. I don’t even like legal Latin. If you can say it in plain English, you should. For one thing, you would have much shorter documents than we now do. For another thing, the public would understand what lawyers do, what judges do, better. They might understand it even from reading an opinion or from reading a brief instead of getting it filtered through the lens of a journalist. 

Justice Scalia concurs with Ginsburg and provides specific examples of legal terminology that would be better-off lost:

Avoid legalese ... A good test is, if you used the word at a cocktail party, would people look at you funny? You talk about the instant case or the instant problem. That’s ridiculous. It’s legalese. This case would do very well. Another one of my bêtes noires of legalisms is nexus. Yeah, nexus. What is it? It’s Latin for “connection.” You don’t make it more scientific at all by calling it a nexus ... And avoid trendiness. That’s probably the other extreme of legalese. I never use, ever use, nor let my law clerks use such trendy expressions as “the First Amendment informs our consideration of this.” The first time that was used, that was very nice. It was a nice metaphor. But it has lost all of its vividness, and it’s just cant. Another example of the same is “Marbury v. Madison and its progeny.” That was wonderful the first time it was used. It is trite now. Terribly trite. Get some other expression.

The Supreme Court of Virginia's Decision in Condominium Services v. First Owners' Association

It's been raining cats and dogs in Charlottesville this week, but the law library remains dry and cozy. 

So put away your umbrella, grab a cup of hot cocoa, and enjoy the Supreme Court of Virginia's recent opinion in Condominium Services, Inc. v. First Owners' Association (April 21, 2011).  You can read Justice Goodwyn's opinion here. 

--------

Among other issues, Condominium Services examines the tricky phenomenon of contracts referring to other contracts (and other contracts, and other contracts).

This phenomenon can lead to a maze-like inquiry into the way in which the various documents and agreements are intended to relate to each other.  For instance, if Contract A makes a reference to Contract B, but certain provisions of Contracts A and B are contradictory, which document governs the parties' rights?

--------

In Condominium Services, a dispute arose between a condo owners' association and the management company that the association had hired to collect assessments and maintain the property.  The association and management company entered into a contract that provided for termination by the association upon 30 days notice to the management company.

The contract included a statement that "the documents governing this relationship consist of" (1) the contract itself, (2) the Virginia Condominium Act, and (3) the association's bylaws and the condominium declaration.

The association's bylaws contained the  following provisions:

"The Owners’ Association shall not change Management Agents or undertake self-management, without the prior affirmative vote of members representing three-fourths (3/4ths) of the votes of the Residential and Commercial Unit owners present at any meeting of the members duly called for such purpose."

Alas, the relationship between the association and management company did not work out, and the association sent a notice of termination for cause, alleging that the management company failed to provide the association with correct financial records or to file tax returns on its behalf. Notwithstanding the termination, the company continued to collect assessments and to pay itself from the association's bank account.

-------

The company argued in Alexandria Circuit Court (and later at the Supreme Court) that the association's termination of the management contract was ineffective because the association never convened a meeting of the owners or obtained the 3/4 vote required under the bylaws. Since the bylaws were mentioned in the management contract, argued the company, the association needed to comply with the 3/4 vote requirement in order to effectively terminate the contract.

-------

The Supreme Court rejected the company's argument. The Court's reasoning provides (limited) guidance into the way in which Virginia law interprets agreements that reference other agreements.

Under these facts, said the Supreme Court, the management contract merely referred to the bylaws -- it did not incorporate them by reference.  Justice Goodwyn writes, "the indicated purpose of the reference to the bylaws ... was to identify documents that [the management company] needed to be aware of and comply with in performing its duties and responsibilities under the Management Agreement."

In other words, the reference to the bylaws was not intended to compel the parties to actually abide by their requirements in carrying out the management agreement.  The Supreme Court states that interpreting the two documents this way "harmonizes" the reference to the bylaws with the express terms of the management contract (in particular the ability of the association to terminate for cause upon 30 days notice).

----------

A shortcoming of the Court's opinion in Condominium Services is its lack of clarity (or a "bright line rule") as to how the bylaws could have been "incorporated by reference" into the management contract, if that had been the parties' intention. 

To-wit: if the parties had included the phrase "the condominium bylaws are incorporated by reference" (rather than the phrase "the documents governing this relationship consist of"), would this different language have altered the Court's decision?  If so, then doesn't the Court's opinion elevate form over substance?

--------

Notwithstanding the unanswered questions, Condominium Services clearly stands for the proposition that if Contract A's reference to Contract B is intended to actually incorporate the substantive requirements and provisions of Contract B, then the parties should be doubly clear as to that intention.

Are your documents harmonized?

Real Estate Law in the News: A Foreclosure Moratorium Amid Paperwork Problems

The Washington Post has had a fascinating series of articles this week (here, here and here) about administrative shortcuts that are throwing the status of thousands of foreclosure proceedings into legal limbo.

The Post's articles focus on Ally Financial, the nation's fourth largest mortgage lender. Although you may not have heard of Ally, you've probably heard of its predecessor -- GMAC, which was originally established for the purpose of making automobile loans but which over time became a major player in the mortgage industry as well.

(In a mind-bending twist to a mind-bending tale, Ally is owned by you -- the US taxpayer -- courtesy of the financial industry bailout. Although there are private-sector stockholders as well, the majority stake in Ally is owned by the US Treasury.)

According to the Post's Ariana Cha, Ally's foreclosure document processing team was responsible for swearing out affidavits -- to be used later in judicial foreclosure proceedings -- which attested to the accuracy of lenders' allegations that homeowners had defaulted on their loans.

Alas, Ally's team was so overloaded with cases (one individual was hand-signing 10,000 documents a month!) that they stopped verifying the documents or signing the affidavits in the presence of a notary public, as required by law. The fallout is that Ally has ordered a moratorium on evictions in 23 states until it sorts out whether its shortcuts were merely "technical" in nature -- or could provide legal grounds for challenging the foreclosures.

----------

Ally's shortcuts raise the question of how important "dotting all the i's and crossing all the t's" is to achieving a truly just result in a dispute.

According to the Post, judges involved in foreclosure proceedings have expressed mixed opinions about the degree to which technical failures, like Ally's, could/should affect the legal result: 

Arthur M. Schack, a Kings County Supreme Court judge in Brooklyn, said it's clear those involved in the foreclosure process are taking the legal requirements too lightly. They forget, he said, that there's a bigger picture to think about: People are losing their homes. Schack has become infamous among some of the nation's most powerful banks for rejecting foreclosure motions that come across his courtroom - about half of the hundreds of files that he has reviewed over nearly three years. He said Ally's document-processing violations shouldn't be dismissed lightly. "There are procedures to be followed in order to get a foreclosure, and you either get it right or not. Either you're pregnant or not. There's no in-between," he said.

But Judge Isaac Garb, a retired trial judge in Bucks County, Pa., who has heard many foreclosure cases and still oversees mortgage mediations, had a different view. He said that because foreclosure files contain standard language, document processors such as Stephan do not need to review every page. He added that the signers are verifying only that the information in the file is "true and correct to the best of his/her knowledge, information and belief." Often, homeowners are using minor problems in the documents simply to stall the foreclosure process as long as possible, Garb said.

The difference in opinion between Judge Schack and Judge Garb is striking.  Judge Schack, emphasizing how much is at stake for the homeowners, is critical of Ally's willingness to take shortcuts.  Judge Garb, on the other hand, seems willing to forgive administrative shortcuts so long as "justice" is ultimately served.

---------

The judges' differing perspectives raise the question of how courts and society should respond to the ongoing crisis of all those outstanding "I.O.U.'s" that can't (or won't) be repaid.

The Difference Between a License and an Easement: Station #2, LLC v. Lynch

In Station #2, LLC v. Michael Lynch, et al. (June 10, 2010), the Supreme Court of Virginia distinguishes between the applicability of the Statute of Frauds to easements and its non-applicability to licenses.

You can link to the full-text of Justice Mims's opinion in Station #2 (which also addresses claims of fraudulent inducement to contract and statutory conspiracy) here.

--------

The plaintiff in Station #2 -- the tenant of the first floor of a multi-use building in Norfolk -- alleged that its upstairs neighbors breached an oral agreement permitting Station #2 to enter the building's upper floor for the purpose of installing soundproofing material (yes, reading this decision immediately put us in mind of the long-running Charlottesville controversy regarding the sound emanating from certain establishments located in Belmont).

--------

The upstairs neighbors countered that the breach of contract claim was barred by the Statute of Frauds -- namely, Code of Virginia §11-2(6), which provides that "any contract for the sale of real estate, or for the lease thereof for more than a year" must be in writing in order to be enforceable.

Rejecting this contention (and reversing the Circuit Court), the Supreme Court determined that permission to install the soundproofing constituted a license ("permission merely to enter the real property of another without ... continuing use") rather than an easement (which "concerns the continuing use of real property") and therefore was outside the ambit of the Statute of Frauds.  As such, the oral grant of the license was enforceable.

--------

The practice lesson here: always consider the specific nature of the property right you are getting or giving when applying a Statute of Frauds analysis (then, if you are the fretful type, put the agreement in writing either way!)

Turn down that infernal noise!!!

The Supreme Court of Virginia on Prescriptive Easements: Hafner v. Hansen

In Hafner v. Hansen (April 15, 2010, Record No. 09-0972), the Supreme Court of Virginia addressed whether or not a property owner whose property is served by an underground sewer line has a prescriptive easement for the line across his neighbor's property. You can read Justice Keenan's decision in Hafner here.

Prescriptive easement cases often include similar analyses as adverse possession cases, about which we have previously written here and here.

In order to establish the existence of a prescriptive easement, an owner must prove that his use of another person's property satisfies each of the following tests:

1. The use must have been adverse and under a claim of right.


2. The use must have been exclusive.


3. The use must have been continuous for a period of at least 20 years.


4. The owner of the servient estate (the property over which the easement is alleged to run) must have had knowledge of it and acquiesced in its use.

In Hafner, the critical issue was whether Hafner's predecessor-in-interest had knowledge that a sewer line lay 11 feet underground his property and served an apartment building on Hansen's property. Hafner claimed that the prior owners most certainly did not know about the sewer line -- after all, the line was (1) underground and (2) not referenced in the deeds conveying the property.

The Arlington Circuit Court disagreed, holding that the prior owners should have known about the sewer line based on plumbing records (this raises the question of how many of us have reviewed our neighbors' plumbing records!).

The Supreme Court reversed, stating that the existence of the plumbing records were insufficient to establish knowledge of the previous owners and that -- in any event -- the maximum period that such knowledge could have existed based on the evidence was 17 (rather than the required 20) years.

The analysis in Haffner suppports a proposition that we often repeat to clients who believe that they may have a prescriptive easement over the property of another: establishing such an easement in court may not be impossible, but it certainly is not easy.

The Supreme Court of Virginia and the Statute of Frauds: Vaughan v. Catholic Diocese of Richmond

Last June we wrote about Virginia's Statute of Frauds as applied to real estate transactions. Our post (here) examined the Supreme Court of Virginia's decision in Moorman v. Blackstock, in which the Court held that draft, unsigned versions of a purchase contract did not satisfy the Statute of Frauds requirement of a "memorandum or note ... in writing."

-------------

In its recent opinion in C. Porter Vaughan, Inc. v. The Catholic Diocese of Richmond (Record No. 090110, February 25, 2010), the Supreme Court re-visited the Statute of Frauds. On this set of facts, the Court concluded that the Statute did not act as a bar to a potential claim.

Justice Lemons wrote the Court's opinion, the full text of which you can read here. The facts of Vaughan are nothing-less-than fascinating.

-------------

C. Porter Vaughn, a real estate brokerage, alleged that it was owed a real estate commission of $242,400 for services performed by its agent Marie Beitz on behalf of the Catholic Diocese.

Vaughan alleged (1) that it had marketed on the Diocese's behalf certain buildings located in Richmond's Fan District and (2) that Vaughan and the Diocese entered into an oral agreement for Vaughan to act as the Diocese's broker and to be paid a commission in the event of a sale.

Aha!, said the Diocese: Code of Virginia § 11-2(7) (not to be confused with §11-2(6), the provision examined in Moorman v. Blackstock) states that the Statute of Frauds applies to "any agreement or contract for services to be performed in the sale of real estate." Since the agreement between Vaughan and the Diocese was an oral agreement, argued the Diocese, it was not enforceable in Virginia's courts.

The trial court upheld the Diocese's demurrer on the grounds that the Statute of Frauds indeed bars Vaughan's claim for the real estate commission.

---------------

The Supreme Court, however, reversed the demurrer and remanded the case to the trial court for consideration on its merits. The Court's reasoning was as follows:

Vaughan had been able to produce several written documents bearing the signature of representatives of the Diocese. Those documents included a ratified purchase contract for a sale of the property which eventually fell through -- but which contained language stating that Marie Beitz would be paid a 4% commission, by the Diocese, from the sale proceeds.

In a well-crafted and thoughtfully reasoned opinion, Justice Lemons found that the prior contract -- together with the other written documents -- served to remove the bar of the Statute of Frauds.

Addressing the Diocese's argument that the prior contract should not be used in connection with a claim on a later transaction, Justice Lemons reasoned as follows:

When the bar [of the Statute of Frauds] is removed, it is the oral contract which is subject to enforcement, not the memorandum. Because the memorandum serves only to remove a bar to the enforcement of the oral contract, the validity of the oral contract may be established by other evidence.

The "other evidence" included the other written documents that tended to establish the existence of a brokerage agreement.

------------------

A particularly interesting aspect of the the opinion in Vaughan is its emphasis on justice (as opposed to technicalities) as the primary objective of the law -- and its implication that Beitz/Vaughan may have had a duly-earned fee wrongfully withheld by the Diocese:

The object of the statute of frauds is to prevent frauds and perjuries, and not to perpetrate them, so that the statute is not enforced when to do so would cause a fraud and a wrong to be perpetrated.

Conservation Easements in US Tax Court: Simmons v. Commissioner

Logan Circle in Washington, DC

In Simmons v. Commissioner of Internal Revenue Service, the US Tax Court held (1) that the taxpayer was entitled to the charitable donation deduction for two conservation easement donations but (2) reduced the value of the donations.

Simmons was decided on September 15, 2009, and you can read the full opinion by Judge Goeke here.

---------

Dorothy Jean Simmons donated historic preservation easements on two properties that she owned in Washington, DC (one in Logan Circle and the other on Vermont Avenue). Such easements are often referred to as "façade easements," because the deed restrictions focus on retaining the existing façade of the building.

Ms. Simmons's appraiser valued the Logan Circle easement donation at $162,500 and the Vermont Avenue donation at $93,000.

The IRS challenged the donations on several grounds:

1. First, the IRS argued that no charitable purposes described in IRC Section 170(h) were served by the easements, because the deeds permitted the easement donee (the L'Enfant Trust) to consent to future changes to the buildings' façades notwithstanding the deed restrictions.
   


2. Second, the IRS argued that the deeds of easement did not satisfy the subordination requirements of the Treasury Regulations (both properties were mortgaged; as we tell our easement-considering clients: if your property is subject to a mortgage/deed of trust, then contact your lender early in the process in order to make them aware of the contemplated easement and to obtain their package of subordination requirements!).
   


3. Third, the IRS argued that Ms. Simmons's appraisals were not "qualified appraisals" for purposes of Treasury Regulation 1.170A(13)(c)(3).
   


4. Fourth, the IRS argued that Ms. Simmons did not obtain the required "contemporaneous written acknowledgment" from the donee, L'Enfant Trust.

The Tax Court rejected each of the IRS's contentions and, in doing so, essentially followed a "substantial compliance" framework in evaluating the donations (and reporting thereof).

The adoption of a substantial compliance framework distinguishes Simmons from several earlier cases (not surprisingly, the decision is being hailed in the land trust community). The opinion means that clearer guidance awaits a future easement decision by a higher court.

--------

Taking the above-arguments in order, the Simmons Court reasoned as follows:

1. With respect to "conservation purposes": the Court stated that Treasury Regulation 1.170A-14(d)(5) expressly permits an easement donation to satisfy the "conservation purposes" test even if future development is allowed, so long as that development is subject to local, state and federal laws and regulations (and Ms. Simmons's deeds provided that future alterations were subject to such laws and regulations). Unfortunately, the Court does not delve into this issue other than to reference the terms of the deed, thus the opinion does not provide a great deal of guidance on "closer calls" that could arise with respect to the conservation purpose requirement in other easements.
   


2. With respect to subordination requirements: the Court said that the requirements were met because both easement deeds contained paragraphs with specific references to the mortgages. Interestingly, the Court made this finding notwithstanding the IRS's contention that the deeds did not themselves contain subordination language. Without reviewing the Simmons deeds, it is difficult to know the basis for the IRS's argument (was the word "subordinate" omitted? Did the banks' trustees not sign?) and why the Court found it wanting.
   


3. With respect to whether the appraisals were "qualified appraisals": the Court held that they were -- even though they did not, for instance, include a statement that they were prepared for income tax purposes and did not include the dates of the donations. In the discussion of the "qualified appraisal" question, the Court is most clearly adopting a "substantial" (rather than "strict") standard of compliance.
   


4. With respect to the "contemporaneous written acknowledgment": the Court held that the deed of easement itself satisfies the acknoweldgment requirement. This is a particularly interesting holding because it rejects the IRS position that prior case law supports a standard of strict compliance with the contemporaneous written acknowledgement requirement.

In the second part of its holding, the Simmons Court reduced the value of the claimed donations -- more on that analysis in a future post.

-------------

The Simmons decision is certain to receive significant attention in light of the IRS's continuing scrutiny of conservation easement donations. Notwithstanding the Court's opinion -- and until additional opinions provide further clarity -- we believe that taxpayers are well-served to assume that the IRS (and the courts) will insist on strict, rather than substantial, compliance with Code and Treasury Regulation requirements.

-----------

Though most of our conservation easement work focuses on open space easements in Albemarle and surrounding counties, Richmond & Fishburne has also represented clients in connection with several historic preservation easements in central Virginia.