DRHI, Inc. v. Hanback ( 2014 )

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DRHI, Inc., Appellant,
against Record Nos. 131974 and 140605
Circuit Court No. CL-2012 17631
William W. Hanback, Jr., Appellee.
Upon appeals from a
judgment rendered by the Circuit
Court of Fairfax County.
Upon consideration of the record, briefs, and argument
of counsel, the Court is of the opinion that there is error in the
judgment of the circuit court.
On August 28, 2000, DRHI, Inc. (IIDRHIII) entered into a
contract to purchase a parcel of land from William W. Hanback, Jr.
("Hanback"). On June 5, 2002, DRHI filed a complaint in the
circuit court against Hanback for specific performance of the land
purchase contract. DRHI alleged, upon information and belief, that
Hanback had received a better offer from a third party and was now
refusing to confirm in writing that he would honor his contractual
obligations and sell the property to DRHI.
Hanback filed an answer and grounds of defense in which he
admitted entering into the land purchase contract, but he argued
that DRHI failed to perform certain terms of the contract and
asserted that the contract was therefore void. On June 9, 2004,
the trial court entered a decree which provided, in relevant part,
that:
Mr. Hanback shall appear at settlement on or
before June 9 th at a time and place selected by
DRHI, Inc. [A]t the time of settlement, DRHI,
Inc. shall pay to Mr. Hanback $400,000 minus
the $10,000 already paid, and . . . at the time
any subdivision plans submitted by DRHI, Inc.
for the development of the property sold by Mr.
Hanback are approved by the City of Fairfax, in
the event that the plans submitted by DRHI,
Inc. permit the construction of six or more
individual residences, DRHI, Inc. shall pay to
Mr. Hanback $70,000 for the sixth lot and
$70,000 for each additional approved lot.
More than eight years later, on November 21, 2012, Hanback
filed a petition for rule to show cause. 1 In his petition, Hanback
asserted that after closing on his property in 2004, DRHI purchased
an adjoining property and designed an integrated development plan
combining the two parcels. The integrated planned development was
approved by the City of Fairfax on May 22, 2007, permitting 15
homes to be constructed between the two parcels. Under the plan,
Hanback's former property contained 5.5 lots and a one acre "buffer
zone,lI and the adjoining parcel contained 9.5 lots. The site plan
for the properties was approved in 2010 by the City of Fairfax, and
construction of the homes began in 2012.
Hanback asserted in his petition, that once he became aware
that 15 homes were being constructed on the two parcels, he
contacted DRHI and requested the additional funds that were owed to
him under the 2004 order. Hanback attached a letter from DRHI to
1 Hanback did not file an independent action. He filed his petition
for rule to show cause in the previously filed civil action. The
petition for rule to show cause contains the same record number as
the underlying civil action.
2
his petition in which DRHI asserted that it had paid Hanback in
accordance with the contract based upon conditions existing at the
time of closing l and was under no obligation to pay him additional
sums.
In his petition l Hanback argued that the one acre buffer zone
assigned to his former property allowed for 10 additional homes to
be constructed on the adjoining parcell and demanded $70 000 for 1
each additional lot (over the five for which he had already been
paid) attributable to his property. He claimed that DRHI violated
the June 9 1 2004 order by refusing to pay and asked the trial court
to issue the rule to show cause and hold DRHI in contempt of court.
The following proceedings then took place:
• On May 9 1 2013 1 the circuit court held an evidentiary
hearing on the petition for rule to show cause. The circuit
court issued a letter opinion on July 16 / 2013 1 in which it
held the following:
Mr. Hanback's Verified Petition for Rule
to Show Cause is hereby granted. DRHI is in
contempt of the June 9 2004 Decree of this
1
Court. DRHI is directed to appear on FridaYI
January 17/ 2014 at 10:00 a.m. to show cause
1
why it is not in contempt of the Decree. DRHI
may purge itself of this contempt finding by
paying to Mr. Hanback the $350 000 additional 1
compensation owed under the terms of the Decree
on or before the January 17/ 2014 review date .
• On August 8 1 2013 1 the circuit court held a hearing l during
which the parties agreed to move up the date of the show
cause hearing.
3
• On August 9, 2013, the circuit court issued a rule to show
cause to DRHI which stated:
You are hereby ordered to appear before this
Court on the 16th day of September 2013 at 8:30
a.m., or as soon thereafter as this matter may
be heard, and show cause, if any you can, why
you should not be held in contempt of Court,
and fined, imprisoned or both for any such
contempt, for your failure to comply with the
provisions of the Order entered on June 9,
2004. Prior to that appearance, you may purge
the contempt by paying $350,000.00, plus any
applicable interest, to counsel for Hanback .
• On September 20, 2013, after determining that DRHI had not
paid the $350,000, the circuit court entered an order
finding DRHI in contempt of the June 9, 2004 order. The
order stated I! [t]hat a judgment shall be, and hereby is,
entered for Hanback against DRHI in the amount of $350,000,
which represents the outstanding amount owed under the June
9, 2004 decree. I!
DRHI filed a notice of appeal to both the Court of Appeals of
Virginia and to this Court. Prior to filing a petition for appeal
in this Court, DRHI filed a motion for relief from collection
proceeding in the Court of Appeals and this Court. On December 18,
2013, this Court declined the motion, finding that the motion arose
out of a judgment of contempt, the appeal of which was pending in
the Court of Appeals, and that the Court therefore lacked
jurisdiction over the motion.
On the same day this Court issued its order, DRHI filed its
petition for appeal in this Court. The appeal contained the
following assignments of error:
4
1. The lower court erred when it entered a $350,000 judgment in
favor of Appellee Hanback because it did not have the
jurisdiction to award a monetary judgment.
2. The lower court erred when it entered a $350,000 judgment in
response to Appellee Hanback's request for the issuance of a
rule to show cause. The court did not have the authority by
way of its contempt powers to award this judgment.
3. If, arguendo, the lower court had the jurisdiction and
authority to entertain Appellee Hanback's demand for entry of
a monetary judgment, it erred when it considered irrelevant
evidence to come to this award.
4. The lower court erred when it entered a $350,000 judgment in
favor of Appellee Hanback because the evidence it considered
to come to this award establishes that no sum is due.
DRHI's petition for appeal to the Court of Appeals contained
the following assignments of error:
1. The lower court erred when in August 2013 it issued a rule to
show cause against DRHI, Inc. and thereafter found it in
contempt for its failure to pay a sum allegedly due from a
2001 real estate contract which closed in 2004.
2. The lower court erred when it issued a rule and found DRHI in
contempt because these actions came as a result of its
redrafting of the 2004 decree.
3. The lower court erred when it issued a rule and found DRHI in
contempt because these actions came as a result of the court's
redrafting of a 2001 contract which the 2004 decree ordered be
specifically enforced.
4. The lower court erred when it found DRHI in contempt because
Hanback's evidence did not show a violation of the terms of
the decree.
5. The lower court erred when it found DRHI in contempt because
DRHI's failure to pay was justified.
5
6. The lower court erred when it found DRHI in contempt because
it relied upon irrelevant evidence to corne to this finding.
7. The lower court erred when it allowed Hanback to relitigate
the 2002 bill of complaint and awarded relief not requested in
that litigation.
Jurisdiction
As evidenced by the assignments of error in the two petitions
for appeal, one of the central questions posed in the appeals is
whether the trial court's order that DRHI pay Hanback $350,000
constituted a monetary judgment, a civil contempt fine, or both.
This Court has jurisdiction over appeals from money judgments in
civil cases pursuant to Code § 8.01-670(A) (3). Because it was not
immediately apparent from the petitions for appeal whether this
case involved a monetary judgment, a civil contempt fine, or both,
this Court determined that in the interests of judicial economy it
should grant DRHI's petition for appeal to this Court (Record No.
131974), and certify the case before the Court of Appeals (Record
No. 140605) pursuant to Code §§ 17.1-409(A) and 409(B) (2).
In the interests of judicial economy, we have certified the
appeal of contempt convictions from the Court of Appeals in other
situations. In Nusbaum v. Berlin, 273 Va. 385, 641 S.E.2d 494
(2007), the appellant had appealed an award of monetary sanctions
to this Court and a criminal contempt conviction and fine to the
Court of Appeals. We awarded Nusbaum an appeal on the monetary
sanctions and certified the criminal contempt appeal from the Court
of Appeals pursuant to Code §§ 17.1-409(A) and -409(B) (2). Id. at
390, 641 S.E.2d at 496.
6
In Petrosinelli v. PETA, 273 Va. 700, 706, 643 S.E.2d lSI, 154
(2007), we certified an appeal of a civil contempt finding and
compensatory fine. Petrosinelli, the appellant, did not have a
separate appeal pending in this Court. However, other members of
Petrosinelli's law firm had filed an appeal of monetary sanctions
in this Court. Williams & Connolly v. PETA, 273 Va. 498, 643
S.E.2d 136 (2007). The monetary sanctions and the civil contempt
arose out of the same underlying litigation and, therefore in the
interests of judicial economy, we certified Petrosinelli's appeal
and decided both cases.
The dissent contends that we should not have certified the
appeal from the Court of Appeals in this case because there is no
separate monetary sanction for misconduct, or any other issue over
which this Court has jurisdiction under Code § 8.01-670, and
therefore no second issue with which the contempt challenge could
be intertwined or upon which it could depend. However, in
Petrosinelli there was no separate monetary sanction or second
issue either. The only issue in Petrosinelli was whether the trial
court erred in holding Petrosinelli in civil contempt and ordering
him to pay a compensatory fine of $11,305 to PETA. 273 Va. at 706,
643 S.E.2d at 154. There were, however, monetary sanctions in a
separate appeal brought by separate appellants, involving the same
underlying litigation, and we deemed that it would be expeditious
to hear and decide both appeals together. But our power to certify
Petrosinelli's appeal from the Court of Appeals was not dependent
upon having a second appeal pending in this Court over which we had
independent jurisdiction.
7
The power to certify an appeal from the Court of Appeals lies
within the discretion of this Court. When we determine that it
appropriate to exercise that discretion, which we rarely do, we are
not required to make specific findings about the docket or status
of work in the Court of Appeals, as the dissent implies. In this
case, we determined that both appeals arose from the same
underlying facts, and a decision in one appeal could very well have
an impact on the other appeal. Accordingly, we certified the
appeal from the Court of Appeals pursuant to Code §§ 17.1-409(A)
and -409(B) (2). The effect of such certification transfers
jurisdiction to this Court over the entire case, regardless of the
outcome on the merits.
Civil Contempt
We review the exercise of a trial court's civil contempt power
under an abuse of discretion standard. Petrosinelli, 273 Va. at
706, 643 S.E.2d at 154; see also Tonti v. Akbari, 262 Va. 681, 687,
553 S.E.2d 769, 772 (2001).
We hold that the trial court's September 20, 3013 order is a
judgment of civil contempt which awarded Hanback a compensatory
fine in the amount of $350,000. We must now determine whether the
trial court abused its discretion when it held DRHI in contempt and
awarded the compensatory fine to Hanback.
The June 9, 2004 order required Hanback to appear at
settlement, and ordered DRHI to pay Hanback $400,000, minus the
$10,000 already paid. However, the order also decreed IIthat at the
time any subdivision plans submitted by DRHI, Inc. for the
development of the property sold by Mr. Hanback are approved by the
City of Fairfax, in the event that the plans submitted by DRHI,
8
Inc. permit the construction of six or more individual residences,
DRHI, Inc. shall pay to Mr. Hanback $70,000.00 for the sixth lot
and $70,000 for each additional approved lot thereafter. 11 This
June 9, 2004 order was not an enforceable judgment in favor of
Hanback, and no finite amount of damages was identified. 2 The
additional amount DRHI might owe to Hanback was left open and was
dependent on numerous factors which had not occurred as of June 9,
2004.
Under well-established Virginia jurisprudence, contempt only
lies II 'for disobedience of what is decreed, not for what may be
decreed. '" Petrosinelli, 273 Va. at 706-07, 643 S.E.2d at 154
(citation omitted). "' [B]efore a person may be held in contempt
for violating a court order, the order must be in definite terms as
to the duties thereby imposed upon him and the command must be
expressed rather than implied. '" Id. at 707, 643 S.E.2d at 154
(quoting Winn v. Winn, 218 Va. 8, 10, 235 S.E.2d 307, 309 (1977).
"' [F]or a proceeding in contempt to lie, '" there "'must be an
express command or prohibition' which has been violated." Id.
(quoting French v. Pobst, 203 Va. 704, 710, 127 S.E.2d 137, 141
(1962)). These principles arise from the recognition that the
"'judicial contempt power is a potent weapon. '" Id. at 706, 643
S.E.2d at 154 (quoting International Longshoremen's Ass'n v.
Philadelphia Marine Trade Ass'n, 389 U.S. 64, 76 (1967)). See also
Shebelskie v. Brown, 287 Va. 18/ 30, 752 S.E.2d 877, 884
(2014) (same) .
2 In this order we do not reach the question whether contempt
proceedings are an appropriate process for enforcing civil monetary
judgments outside the realm of domestic relations cases.
9
In June 2004, when the circuit court entered its order, DRHI
had not yet received approval from the City of Fairfax regarding
any subdivision plans for the development of Hanback's property.
The June 9, 2004 order left unresolved any issues surrounding
DRHI's future failure to pay and any consequent damages. Because
the June 9, 2004 order did not contain definite terms as to the
total amount DRHI was required to pay and when such payment was
due, DRHI could not be held in contempt for failing comply with the
June 9, 2004 order.
Accordingly, the circuit court abused its discretion by
holding DRHI in contempt for violating the June 9, 2004 order and
by ordering DRHI to pay Hanback the amount of $350,000. We reverse
the circuit court's judgment in the case certified from the Court
of Appeals and dismiss the rule to show cause. Our decision moots
the controversy in the direct appeal and that case is dismissed.
This order shall be certified to the Circuit Court of Fairfax
County and shall be published in the Virginia Reports.
JUSTICE MIMS, with whom JUSTICE McCLANAHAN and JUSTICE POWELL join,
dissenting.
While the majority's conclusion that the circuit court abused
its discretion may be correct, the Court has no subject matter
jurisdiction to reach it. Therefore, I must respectfully dissent.
The majority correctly concludes that these appeals arise from
a judgment for civil contempt. Code § 19.2-318 vests subject
matter jurisdiction over such judgments in the Court of Appeals.
The majority nevertheless reaches the merits, asserting that the
10
nature of the judgment was not clear when we granted the petition
for appeal in Record Number 131974 and certified Record Number
140605 from the Court of Appeals. The majority also asserts that
the certification and ultimate disposition are in the interests of
judicial economy. These assertions are well-founded, yet cannot
create subject matter jurisdiction over these appeals.
II [S]ubject matter jurisdiction. . is the authority granted
through constitution or statute to adjudicate a class of cases or
controversies . II Morrison v. Bestler, 239 Va. 166, 169, 387
S.E.2d 753, 755 (1990). IIWhile a court always has jurisdiction to
determine whether it has subject matter jurisdiction, a judgment on
the merits made without subject matter jurisdiction is null and
void." rd. at 170, 387 S.E.2d 755-56.
Through Code § 19.2-318, the General Assembly vests subject
matter jurisdiction over appeals from circuit courts' judgments for
civil contempt in the Court of Appeals. 3 Although the General
Assembly vests subject matter jurisdiction over judgments of the
Court of Appeals in this Court through Code § 17.1-411 (except in
cases where the judgment of the Court of Appeals is final), our
jurisdiction in civil contempt cases is derivative. We do not have
subject matter jurisdiction to review a circuit court's judgment
for civil contempt by operation of these two statutes; rather, in
such cases we have subject matter jurisdiction only to review the
judgment rendered by the Court of Appeals.
3 Code § 16.1-69.24 provides for appeals of district courts'
judgments for civil contempt.
11
Accordingly, once the majority concluded that the judgment
appealed from was a judgment for civil contempt, the Court's
authority to review it in Record Number 131974 ended.
The majority finds an independent basis to review the circuit
court's judgment in Record Number 140605 under the authority
conferred by Code § 17.1-409. In that section, the General
Assembly empowered us to certify l1any case in which an appeal has
been taken to or filed with the Court of Appeals. II Code § 17.1­
409(A) (emphasis added). liThe effect of such certification shall
be to transfer jurisdiction over the case to the Supreme Court for
all purposes. II Id.
Through Code § 17.1-409(A), the General Assembly effectively
makes the subject matter jurisdiction of this Court coextensive
with the subject matter jurisdiction of the Court of Appeals,
enabling us to review any jUdgment that court may review. However,
our subject matter jurisdiction is contingent. Code § 17.1-409(B).
It is predicated upon the existence of either of two exigent
circumstances. In the words of the statute, we may certify a case
from the Court of Appeals
only when, in its discretion, the Supreme Court
determines that:
1. The case is of such imperative public
importance as to justify the deviation from
normal appellate practice and to require prompt
decision in the Supreme Court; or
2. The docket or the status of the work of the
Court of Appeals is such that the sound or
expeditious administration of justice requires
that jurisdiction over the case be transferred
to the Supreme Court.
Id. (emphasis added).
12
While the statute commits this decision to our discretion,
discretion does not IImean that the court may do whatever it
pleases." Landrum v. Chippenham & Johnston-Willis Hosps., Inc.,
282 Va. 346, 352, 717 S.E.2d 134, 137 (2011) (quoting Kern v. TXO
Production Corp., 738 F.2d 968, 970 (8th Cir. 1984)) (alteration
omitted). The General Assembly said lIonly,lI Code § 17.1 409(B),
using "simple, clear and unambiguous language!! and we must "'read
it to mean what it says.' II Commonwealth v. Morris, 281 Va. 70, 79,
705 S.E.2d 503, 507 (2011) (quoting Blowe v. Pe=yton, 208 Va. 68,
74, 155 S.E.2d 351, 356 (1967)).
The first predicate exigent circumstance, imperative public
importance, is not at issue in this case. Our certification order
invoked only the second predicate exigent circumstance, the
administration of justice. DRHI, Inc. v. Hanback, Record No.
140605 (Apr. 22, 2014). However, the plain language of Code
§ 17.1-409(B) (2) makes clear that the General Assembly intended
that predicate to apply only when the Court of Appeals cannot
timely do its work. Such a determination should not be made
lightly. Neither that court nor the parties represented to us that
such a condition existed and we had no basis to believe it did.
Nevertheless, the majority asserts that certification was
warranted here in the interests of judicial economy. But the
General Assembly did not include judicial economy in Code § 17.1­
409(B) as a predicate for certifying a case from the Court of
Appeals. Thus, mere judicial economy cannot create subject matter
jurisdiction.
The majority compares this case to Nusbaum v. Berlin, 273 Va.
385, 641 S.E.2d 494 (2007), and Petrosinelli v. People for the
13
Ethical Treatment of Animals, Inc., 273 Va. 700, 643 S.E.2d 151
(2007). In Nusbaum, the circuit court imposed on an attorney both
a monetary sanction for misconduct and a criminal penalty for
contempt, arising from a single incident. Id. at 390, 397, 641
S.E.2d at 496, 500. The attorney filed a petition for appeal in
this Court challenging the monetary sanction for misconduct. He
filed a separate appeal in the Court of Appeals challenging the
contempt penalty. Id.
In Petrosinelli, the circuit court imposed on an attorney a
civil penalty for contempt. 273 Va. at 705-06 & n.12, 643 S.E.2d
at 154 & n.12. It also imposed on the attorney's firm a monetary
sanction for misconduct under Code § 8.01-271.1. Williams &
Connolly, LLP v. People for the Ethical Treatment of Animals, Inc.,
273 Va. 498, 509, 643 S.E.2d 136, 140 (2007). The firm filed a
petition for appeal in this Court, id., and the attorney filed an
appeal in the Court of Appeals. Petrosinelli, 273 Va. at 706, 643
S.E.2d at 154.
In both cases, the Court certified the contempt appeal pending
in the Court of Appeals under the administration of justice
predicate set forth in Code § 17.1-409(B) (2). Nusbaum, 273 Va. at
390, 641 S.E.2d at 496; Petrosinelli, 273 Va. at 706, 643 S.E.2d at
154.
Assuming, arguendo, that the circumstances in Nusbaum and
Petrosinelli actually were sufficient to satisfy Code § 17.1­
409(B) (2), they are distinguishable. Both of the appeals certified
from the Court of Appeals involved a ruling imposing a penalty for
contempt--a ruling factually intertwined with a separate ruling
awarding monetary sanctions. This Court unquestionably had subject
14
matter jurisdiction over the latter under Code § 8.01 670(A) (3).
Accordingly, it may have been appropriate to certify the appeals
pending in the Court of Appeals where this Court already had an
independent basis for subject matter jurisdiction to review an
issue "derive[d] from a common nucleus of operative fact," United
Mine Workers v. Gibbs, 383 U.S. 715, 725 (1966) (discussing federal
pendent jurisdiction over state law claims) I with an issue then
before the Court of Appeals.
However, there is no need to explore whether Nusbaum and
Petrosinelli were correctly decided because in this case there is
only one ruling. The fact that the party dissatisfied with a
judgment pursued appeals in two courts at the same time is not an
adequate basis for this Court to certify the appeal pending in the
Court of Appeals under the administration of justice predicate set
forth in Code § 17.1-409(B) (2).
Accordingly, having determined that the subject matter of the
petition for appeal in Record Number 131974 is, under Code § 19.2­
318, within the jurisdiction of the Court of Appeals, this Court
lacks subject matter jurisdiction to hear it. The Court therefore
should dismiss the petition for appeal as improvidently granted.
Similarly, having improperly certified the appeal in Record Number
140605 from the Court of Appeals without justification under either
of the predicates set forth in Code § 17.1-409(B), the Court should
vacate its order certifying that appeal, thereby returning the case
to that court for review on the merits. While such a disposition
15
may not be in the interests of judicial economy, lack of subject
matter jurisdiction trumps judicial economy. I therefore must
dissent.
A Copy,
Teste:
Clerk
16