Northern Virginia Real Estate v. Martins ( 2012 )

Present: All the Justices
NORTHERN VIRGINIA REAL ESTATE, INC., ET AL.
v. Record No. 101836 OPINION BY JUSTICE DONALD W. LEMONS
January 13, 2012
KAREN MARTINS, ET AL.
FORREST WALPOLE
v. Record No. 101844
KAREN MARTINS, ET AL.
FROM THE CIRCUIT COURT OF FAIRFAX COUNTY
Jonathan C. Thacher, Judge
In these appeals, we consider whether the Circuit Court of
Fairfax County erred when it imposed sanctions, pursuant to
Code § 8.01-271.1, against Northern Virginia Real Estate, Inc.
("NVRE"), its principal broker, Lauren Kivlighan ("Kivlighan"),
and their counsel, Forrest Walpole ("Walpole").
I. Facts and Proceedings Below 1
In July 2007, NVRE and Kivlighan (together, "the
plaintiffs"), filed a four-count complaint against McEnearney
Associates, Inc., its real estate agent Karen Martins, and
David and Donna M. Gavin (together, "the defendants"), alleging
conspiracy to harm in business, interference with contract,
interference with contract expectancy, and defamation.
1
The relatively tortuous path of complaints, demurrers,
motions, amended complaints, and other pleadings is recited
herein to illustrate why and how expenses and legal fees
ultimately accumulated.
Specifically, the plaintiffs' complaint alleged that: (1)
Donna Gavin (acting as attorney-in-fact for her mother
Bernadette A. Kennedy) signed a written 90-day exclusive
listing agreement ("listing agreement") with NVRE for NVRE to
sell certain real estate ("the Kennedy property") owned by the
Bernadette A. Kennedy Living Trust ("the Trust"), Bernadette A.
Kennedy and Donna M. Gavin, Trustees, in exchange for a five
percent commission of the sales price; (2) the defendants knew
of the listing agreement; (3) NVRE delivered a written purchase
offer for $750,000 to Donna Gavin on May 5, 2007; (4)
thereafter, the defendants formed a conspiracy and interfered
with NVRE's listing agreement or contract expectancy, which
caused Donna Gavin to terminate the listing agreement on May 8,
2007, and NVRE to lose the five percent commission when
Kennedy's property was sold to buyers represented by McEnearney
Associates, Inc. ("MAI") and Karen Martins ("Martins"). The
plaintiffs sought $1 million in compensatory damages and
$500,000 in punitive damages.
Regarding the defamation count, plaintiffs alleged that:
(1) between May 4 and May 8, 2007, MAI and Martins falsely
accused Kivlighan of "not working in the best interest" of the
Kennedy property's owner and "discouraging [Martins] from
submitting a written offer to purchase the [Kennedy] property";
(2) David Gavin falsely accused Kivlighan of "lying" to him and
2
Donna Gavin; and (3) the Gavins, writing to the Virginia
Department of Professional and Occupational Regulation
("DPOR"), falsely accused Kivlighan of being "an untrustworthy
agent" who "misrepresented her clients," and turned Kennedy's
property into a "pocket listing." The complaint further
asserted, within the defamation count, that plaintiffs were
"likely to have evidentiary support after a reasonable
opportunity for discovery."
The Gavins demurred to the defamation count and MAI and
Martins moved for a bill of particulars. In a consent order,
the trial court sustained the Gavins' demurrer to the
defamation claims and granted MAI's and Martins' motion for a
bill of particulars, and allowed plaintiffs to amend their
complaint.
Plaintiffs subsequently filed an eleven-count amended
complaint, alleging two counts each of conspiracy to harm in
business and interference with contract expectancy against
David Gavin, Martins, and MAI; three counts of defamation as to
MAI and Martins; three counts of defamation as to David and
Donna Gavin; and one count of defamation as to David Gavin,
separately. The amended complaint included allegations that
Martins stated in a May 8, 2007 letter to the Gavins that,
"[m]y broker [(MAI)] had myself add certain verbiage to help
protect you against your former obligation to the other agent,"
3
and that David Gavin told Martins, "I caught [Kivlighan] in a
few lies."
The plaintiffs also filed a bill of particulars listing
their damages as $168,000 (trebled to $504,000) – consisting of
$37,500, which represented a five percent commission on the
$750,000 purchase offer submitted to Donna Gavin by Kivlighan,
plus $130,500, which represented a six percent commission on a
future sale of the property for $2.175 million as a result of
improvements the plaintiffs proposed their prospective buyer
("Alnifaidy") was going to make to the property.
Regarding conspiracy, the bill of particulars stated that,
beginning May 5, 2007, David Gavin and Martins acted together
to deny NVRE its commission when they: (1) engaged in
"wrongful, slanderous attacks on the character and integrity of
[Kivlighan] with the intent of destroying the confidence [Mrs.
Gavin] had in her"; (2) caused Donna Gavin "to cease working
with plaintiffs and to ignore [NVRE's] valid exclusive listing
agreement"; (3) "in violation of law, failed to work through
[NVRE] in connection with all offers to purchase the [Kennedy]
Property"; and (4) "sought to duplicate the Alnifaidy $700,000
written cash offer for the [Kennedy] Property delivered by
[NVRE] but under a 'For Sale by Owner' scheme" with a three
percent commission to MAI.
4
MAI and Martins demurred to the plaintiffs' amended
complaint as amplified by the bill of particulars, and the
Gavins demurred to the plaintiffs' allegations of defamation,
claiming absolute privilege because the statements they were
alleged to have made "were made (if at all) in the course of a
quasi-judicial proceeding." The trial court: (1) sustained
MAI's and Martins' demurrer to defamation without leave to
amend; (2) sustained the Gavins' plea of absolute privilege and
dismissed the defamation counts involving their statements made
to DPOR; (3) sustained David Gavin's demurrer to defamation;
and (4) granted the plaintiffs leave to file a second amended
complaint.
The plaintiffs filed an eight-count second amended
complaint, again alleging two counts each of conspiracy to harm
in business and interference with contract expectancy against
David Gavin, Martins, and MAI; three counts of defamation
against the Gavins as to their statements made to DPOR; and one
count of defamation against David Gavin separately as to the
statement he allegedly made to Martins, that he "caught
[Kivlighan] in a few lies."
MAI and Martins demurred to the plaintiffs' second amended
complaint, but the trial court overruled their demurrer. David
Gavin also demurred to the conspiracy to harm in business and
5
interference with contract expectancy allegations but the trial
court did not rule on his demurrer before trial.
Significantly, MAI and Martins asserted, in their answer
to the plaintiffs' second amended complaint, a "Fifth
Affirmative Defense," namely, that "[n]either Plaintiff ever
had a contract with the owner of the Subject Property, nor did
either Plaintiff have a reasonable contractual or business
expectancy which could support a claim of tortious
interference. A reply is requested pursuant to Virginia Rules
3:11 and 1:4(e)." The plaintiffs never replied to MAI's and
Martins' fifth affirmative defense, and it was deemed admitted
before trial. The case proceeded to a jury trial against MAI,
Martins, and David Gavin on conspiracy to harm in business and
interference with contract expectancy, and against David Gavin
on the one count of defamation alleging that he told Martins,
"I caught [Kivlighan] in a few lies."
At trial, the evidence demonstrated that: (1) Martins
called Donna Gavin on May 2, 2007, and that Martins told Donna
Gavin she had possible buyers for the home; (2) Donna Gavin
told Martins that David Gavin would call her back "because we
had a real estate agent and he could provide her with all the
information"; (3) David Gavin returned Martins' call on May 3,
2007; and (4) David Gavin gave Kivlighan's phone number to
Martins. Martins subsequently called Kivlighan, who told her
6
there was a full-price offer with a discounted commission for
the Kennedy property, which Kivlighan thought that her clients
would take. When Martins' prospective buyers (the "Wheelers")
heard of the full price offer, they told Martins not to make an
offer because they did not want to get into a bidding war.
On May 4, 2007, Kivlighan sent by facsimile a $730,000
offer from Alnifaidy to Donna Gavin. On May 5, 2007, David
Gavin called Kivlighan, upset about the offer's conditions,
including the fact that there was a home inspection contingency
despite the cover sheet to the offer stating that the offer was
for the Kennedy property "as-is" and that the offer included a
four-point-one (4.1) percent seller subsidy, resulting in an
actual offer of just over $700,000, not $730,000.
Thereafter, on May 5, 2007, David Gavin left a voicemail
for Martins; Martins returned David Gavin's call the next day
and told him, in response to his question why she had never
submitted an offer on behalf of her interested buyers, that
Kivlighan had discouraged her from submitting an offer. David
Gavin told Martins that they were "in the process of
terminating" Kivlighan. At trial, David Gavin denied saying he
had caught Kivlighan "in a few lies," and Martins offered no
evidence that Gavin made that statement. Both denied the
allegation that Martins said Kivlighan was not working in the
Gavins' best interest.
7
On May 7, 2007, Donna Gavin sent Kivlighan an electronic
mail message stating that she would not accept Alnifaidy's
offer unless it was resubmitted under different terms,
including a reduction in the seller subsidy and clarification
that the house would be sold "as-is." Donna Gavin also asked
Kivlighan to "explain why Mr. Alnifaidy's Earnest Money [wa]s
in the form of a Check [dated almost one and a half (1½)]
months prior to m[y] signing [the listing agreement]."
Donna Gavin testified that, based on "what [she] saw in
[Alnifaidy's offer and a conversation with her husband, she
decided] to have an attorney look at th[e] contract. There's
something just not right about it." As a result of the
information she received from a lawyer, Donna Gavin concluded
that she "had grounds to terminate [Kivlighan]," and on May 8,
2007, she sent Kivlighan written notice terminating the listing
agreement.
Donna Gavin subsequently refused an increased offer from
Alnifaidy, having received it from Kivlighan after she signed a
contract to sell the Kennedy property to the Wheelers.
Thereafter, the Kennedy property was sold to the Wheelers with
a buyer's commission paid to MAI.
Significantly, Kivlighan admitted at trial that: (1) she
was not owed a commission on Alnifaidy's offers; (2) MAI never
had a listing agreement for the Kennedy property; and (3) she
8
never heard any telephone conversations between Martins and
Donna or David Gavin. Alnifaidy testified that he never had
any agreement with Kivlighan or told her that she could sell
the Kennedy property for him in the future.
The defendants moved to strike the plaintiffs' evidence at
the close of the plaintiffs' case-in-chief but, before the
trial court ruled on the defendants' motion to strike, the
plaintiffs moved to nonsuit, and the trial court granted the
plaintiffs' motion to nonsuit as against all defendants. The
defendants stated they intended to file motions for sanctions,
and the trial court suggested that counsel for all the parties
"confer. If there are any motions, decide a day that you want
to argue . . . ." The defendants' counsel suggested "a
suspending order of 30 days . . . just to be safe," and the
trial court stated that "[t]hirty days is fine, or you can say
until further order of Court. Whatever language you can agree
on."
On April 30, 2008, the trial court entered an order which:
(1) granted the plaintiffs' motion to nonsuit all counts; (2)
dismissed the case as to all counts and all parties; and (3)
further stated that "this Order is SUSPENDED until further
order of this Court."
On July 11, 2008, the defendants filed motions for
sanctions against the plaintiffs and plaintiffs' counsel,
9
Forrest Walpole ("Walpole"), seeking attorneys' fees and costs,
and arguing that the plaintiffs violated Code § 8.01-271.1 "by
filing this suit without any basis in fact, without support in
law, and with improper purposes, all as prohibited by statute."
In response, the plaintiffs and Walpole filed an opposition to
the defendants' motions for sanctions, arguing that the motion
for sanctions should be denied because the plaintiffs and
plaintiffs' counsel "[i]n good faith and after reasonable
inquiry . . . filed the claims for conspiracy, defamation and
tortious interference with contract and contract expectancy
when Defendants acted in concert to deprive NVRE of a
commission and contract expectancy from the sale of [the
Kennedy property]."
The trial court subsequently heard oral argument on the
motions for sanctions, and the defendants submitted the billing
records for their attorneys' fees and costs to the trial court.
On March 17, 2009, the trial court issued a letter opinion
explaining its rulings, and followed that on May 14, 2009, with
a lengthy order granting the defendants' motions for sanctions.
Specifically, the trial court found that: (1) the
complaint, by stating that the allegations were likely to have
support "after reasonable opportunity for discovery," was a
"per se" violation of Code § 8.01-271.1 under Ford Motor Co. v.
Benitez, 273 Va. 242, 639 S.E.2d 203 (2007); (2) the
10
plaintiffs' claims "were filed out of a vindictive and
malevolent desire to injure and intimidate a business
competitor"; and (3) the plaintiffs lacked "any factual basis
for their $135,000 claim to the 'second commission', and
lack[ed] any basis for the $1.35 million defamation claims.
Plaintiffs further lack[ed] a factual basis for a conspiracy
claim."
Although the trial court's May 14, 2009 order stated that
the defendants are entitled to sanctions, the order also stated
that, "on this record, the Court is unable to determine the
appropriate size of the sanction." As a result, the trial
court continued the matter "to hear evidence and argument as to
the quantum of sanctions and reasonableness of Defendant[s']
attorney's fees, respectively, whether the said expenses are
related to the violations of the sanctions statute and to
determine as against whom the respective sanction(s) should be
assessed."
After an evidentiary hearing, at which the trial court
heard voluminous testimony, both expert and otherwise,
regarding the defendants' attorneys' fees, as well as
Kivlighan's own testimony that she relied on Walpole's advice,
the trial court issued a letter opinion and order on June 29,
2010, ordering the plaintiffs and Walpole, jointly and
severally, to pay $113,778.06 to MAI and Martins, and
11
$158,318.40 to the Gavins. The trial court also ordered "that
the Court's suspension of Plaintiffs' nonsuit taken on April
[30], 2008 is lifted."
Specifically, the trial court found that: (1) the
appropriate sanction in this case is the reasonable attorneys'
fees and costs incurred by the defendants; (2) attorneys and
their clients are both "required to act appropriately,
ethically, and within the confines of the law when litigating
cases in Virginia courts"; and (3) there is "substantial
evidence of sanctionable behavior on the part of both the
litigants and the[ir] lawyer." The trial court further opined
that, "[Kivlighan's] actions showed a clear intent to support
[filing] these claims, which were speculative at best . . .
[m]oreover, her actions throughout the litigation are
indicative of and establish the improper purpose with which she
filed this lawsuit."
The trial court also rejected the plaintiffs' and
Walpole's argument that the attorneys' fees and costs claimed
by the defendants were unreasonable because: (1) the defendants
failed to mitigate their damages; (2) defendants' counsel used
block billing practices; and (3) the attorneys' fees incurred
by the defendants were excessive. The trial court subsequently
denied: (1) the plaintiffs' and Walpole's motions to suspend
the June 29, 2010 order "to permit Plaintiffs [and Walpole]
12
adequate time to file their Motion[s] for Reconsideration and
for the Court to consider and rule upon such motion[s]"; and
(2) Walpole's motion for reconsideration and renewed motion for
entry of a suspending order because "Walpole has not raised any
issues not already considered in the matter."
NVRE, Kivlighan, and Walpole timely filed their notices of
appeal and we granted these appeals on the following
assignments of error:
For Northern Virginia Real Estate, Inc., et al. v. Karen
Martins, et al., Record No. 101836:
1. The trial court erred in awarding sanctions under Va.
Code § 8.01-271.1 against NVRE, Kivlighan, and their
trial counsel and in favor of Martins, MAI, Donna
Gavin, and David Gavin when the trial court lacked
jurisdiction to do so because the motions for
sanctions were made, heard, and decided more than 21
days after entry of a nonsuit order, and the trial
court lacked authority under Rule 1:1 of the Rules of
the Supreme Court of Virginia to suspend the finality
of the nonsuit order.
2. The trial court erred in imposing sanctions under Va.
Code § 8.01-271.1 against NVRE, Kivlighan, and their
trial counsel, jointly and severally, rather than
apportioning the sanctions among them based on their
respective conduct relative to each of the parties
that was awarded sanctions.
3. The trial court erred in awarding sanctions under Va.
Code § 8.01-271.1 against NVRE, Kivlighan and their
trial counsel and in favor of Martins, MAI, Donna
Gavin, and David Gavin because it abused its
discretion by making its sanction determination based
on post-filing factual findings, evidentiary rulings,
hindsight, and improper considerations rather than an
objective view of whether NVRE, Kivlighan, and their
trial counsel, after reasonable inquiry, could have
formed a reasonable belief that the Complaint,
13
Amended Complaint, Bill of Particulars, and Second
Amended Complaint met the certification requirements
of Va. Code § 8.01-271.1 at the time each was
respectively filed.
For Forrest Walpole v. Karen Martins, et al., Record No.
101844:
1. The trial court erred in awarding sanctions under Va.
Code § 8.01-271.1 against Walpole, NVRE, and
Kivlighan because it abused its discretion by making
its sanction determination based on post-filing
factual findings, evidentiary rulings, and other
hindsight rather than an objective view of whether
NVRE, Kivlighan, and Walpole, after reasonable
inquiry, could have formed a reasonable belief that
the Complaint, Amended Complaint, Second Amended
Complaint and Bill of Particulars met the
certification requirements of Va. Code § 8.01-271.1
at the time it was filed.
2. The trial court erred in determining the terms of and
quantum of sanctions against Walpole, NVRE and
Kivlighan because it did not properly consider the
defendants' failure to mitigate, the billing
practices of defendants' counselors, the punitive
effect of the award, and ability to pay.
3. The trial court erred when it denied Walpole's motion
for entry of a suspending order without giving
Walpole the opportunity to present oral argument
under Va. Sup. Ct. R. 4:15(d).
4. The trial court erred in awarding sanctions under Va.
Code § 8.01-271.1 against NVRE, Kivlighan and Walpole
when the trial court lacked jurisdiction to do so
because the motions for sanctions were made, heard,
and decided more than 21 days after entry of a
nonsuit order, and the trial court lacked authority
under Rule 1:1 of the Rules of the Supreme Court of
Virginia to suspend the finality of the nonsuit
order.
14
II. Analysis
A. Standard of Review
We have clearly articulated the standard of review for
cases of statutory interpretation:
[A]n issue of statutory interpretation is a pure
question of law which we review de novo. When
the language of a statute is unambiguous, we are
bound by the plain meaning of that language.
Furthermore, we must give effect to the
legislature’s intention as expressed by the
language used unless a literal interpretation of
the language would result in a manifest
absurdity. If a statute is subject to more than
one interpretation, we must apply the
interpretation that will carry out the
legislative intent behind the statute.
Conyers v. Martial Arts World of Richmond, Inc., 273 Va. 96,
104, 639 S.E.2d 174, 178 (2007) (citations omitted).
Similarly, as a question of law, the interpretation of one of
the Rules of this Court is subject to de novo review. See
Brown v. Commonwealth, 279 Va. 210, 217, 688 S.E.2d 185, 189
(2010).
Additionally, in reviewing a trial court's award of
sanctions under Code § 8.01-271.1, we apply an abuse of
discretion standard. Flippo v. CSC Assocs. III, L.L.C.,
262 Va. 48, 65, 547 S.E.2d 216, 227 (2001). We have
stated that,
[i]n applying that standard, we use an objective
standard of reasonableness in determining whether
a litigant and his attorney, after reasonable
inquiry, could have formed a reasonable belief
15
that the pleading was well grounded in fact,
warranted by existing law or a good faith
argument for the extension, modification, or
reversal of existing law, and not interposed for
an improper purpose.
Id. at 65-66, 547 S.E.2d at 227. We have also held that "a
court's imposition of a sanction will not be reversed on appeal
unless the court abused its discretion in 1) its decision to
sanction the litigant, or 2) in the court's choice of the
particular sanction employed." Switzer v. Switzer, 273 Va.
326, 331, 641 S.E.2d 80, 83 (2007).
B. Rule 1:1
The plaintiffs argue that the trial court erred in
awarding sanctions against them and in favor of the defendants
because "the motions for sanctions were made, heard, and
decided more than 21 days after entry of a nonsuit order, and
the trial court lacked authority under Rule 1:1 of the Rules of
[this Court] to suspend the finality of the nonsuit order."
Specifically, the plaintiffs argue that the trial court was
without authority to suspend the nonsuit order because: (1)
there were no motions pending at the time of the nonsuit; (2)
"Rule 1:1 must be interpreted to prohibit trial courts from
generally suspending nonsuit orders to allow motions for
sanctions to be filed, heard, and decided more than 21 days
after [a] nonsuit is taken as a matter of right"; and (3) the
nonsuit order did not "clearly and expressly suspend the final
16
judgment that is obtained upon the granting of a motion for
nonsuit." We disagree and find these arguments without merit.
Rule 1:1 declares that "[a]ll final judgments, orders, and
decrees, irrespective of terms of court, shall remain under the
control of the trial court and subject to be modified, vacated,
or suspended for twenty-one days after the date of entry, and
no longer."
Significantly, for the purposes of this case, we have
previously held that
the provisions of Rule 1:1 are mandatory in order
to assure the certainty and stability that the
finality of judgments brings. Once a final
judgment has been entered and the twenty-one day
time period of Rule 1:1 has expired, the trial
court is thereafter without jurisdiction in the
case. Thus, only an order within the twenty-one
day time period that clearly and expressly
modifies, vacates, or suspends the final judgment
will interrupt or extend the running of that time
period so as to permit the trial court to retain
jurisdiction in the case.
Super Fresh Food Mkts. of Va., Inc. v. Ruffin, 263 Va. 555,
563-64, 561 S.E.2d 734, 739 (2002) (some emphasis omitted).
Additionally, we have noted that, "from its very nature, an
order granting a nonsuit should be subject to the provisions of
Rule 1:1," and "the concept of nonsuit is sufficiently imbued
with the attributes of finality to satisfy the requirements of
Rule 1:1." James v. James, 263 Va. 474, 481, 562 S.E.2d 133,
137 (2002).
17
In this case, the trial court entered an order granting
the plaintiffs a nonsuit on April 30, 2008. However, the trial
court also expressly suspended the nonsuit order on that same
date, pursuant to Rule 1:1, stating:
This matter came to be heard on the 30th day
of April, 2008, on the Plaintiff[s'] motion to
nonsuit all counts and Defendants' oppositions
thereto.
Upon the matter presented to the Court at
the hearing, it is hereby
ADJUDGED, ORDERED, and, DECREED as follows:
The Motion[] to Nonsuit is granted, and this
case is dismissed as to all counts and all
parties; and it is further
ADJUDGED, ORDERED, and DECREED that this
Order is SUSPENDED until further order of this
Court.
(Emphasis added.) The trial court did so in order to entertain
the defendants' motions for sanctions.
The trial court was well within its authority under Rule
1:1 to suspend the nonsuit order as it did and, by explicitly
doing so, it properly retained jurisdiction in this case. Rule
1:1; Super Fresh Food Markets, 263 Va. at 563-64, 561 S.E.2d at
739. Accordingly, we hold that the trial court did not lack
jurisdiction to consider and impose sanctions, as it did in
this case, because the trial court properly suspended the
nonsuit order within the 21-day period provided for in Rule
1:1. The trial court retained jurisdiction over this suit
until 21 days after June 29, 2010 – the date upon which the
18
trial court lifted the suspension of the April 30, 2008 nonsuit
order and entered the final order in this case.
C. Code § 8.01-271.1
Code § 8.01-271.1 provides that,
every pleading, written motion, and other paper
of a party represented by an attorney shall be
signed by at least one attorney of record in his
individual name . . . .
The signature of an attorney or party
constitutes a certificate by him that (i) he has
read the pleading, motion, or other paper, (ii)
to the best of his knowledge, information and
belief, formed after reasonable inquiry, it is
well grounded in fact and is warranted by
existing law or a good faith argument for the
extension, modification, or reversal of existing
law, and (iii) it is not interposed for any
improper purpose, such as to harass or to cause
unnecessary delay or needless increase in the
cost of litigation.
The statute further provides that if this rule is violated, the
court "shall impose" an appropriate sanction upon the attorney,
a represented party, "or both," and that such sanctions may
include reasonable attorney's fees. Code § 8.01-271.1.
Accordingly, we must determine whether the trial court
properly concluded that the plaintiffs and their attorney,
after a reasonable inquiry, could not have formed a reasonable
belief that the second amended complaint was well grounded in
fact and warranted by existing law, or by a good faith argument
for the extension, modification, or reversal of existing law.
Flippo, 262 Va. at 65-66, 547 S.E.2d at 227. Significantly, we
19
have previously stated that a "trial court [is] not limited to
the record in the present case, but [may] properly consider any
relevant and admissible evidence tending to show the attorney's
state of knowledge at the time in question." Benitez, 273 Va.
at 251, 639 S.E.2d at 207.
In this case, the second amended complaint was filed after
the trial court allowed the plaintiffs to amend both their
initial complaint and their first amended complaint.
Nevertheless, the trial court noted, in its order granting the
defendants' motions for sanctions, that "Plaintiffs' [sic]
apparently have forgotten that many of their claims were
dismissed on demurrer, and with prejudice." The trial court
further noted that,
[a]t minimum, the filing of the initial complaint
violated [Code § 8.01-271.1] by asserting in four
numbered paragraphs that the allegations therein
were likely to have support "after reasonable
opportunity for discovery." As this Court
understands the Virginia Supreme Court's decision
in Benitez, such a pleading is a per se violation
of [Code] § 8.01-271.1. Although the
[plaintiffs'] amended complaint contained no such
candid admission that its allegations were
unsupported by fact, Plaintiffs lack any factual
basis for their $135,000 claim to the "second
commission", and lack any basis for the $1.35
million defamations claims. Plaintiffs further
lack a factual basis for a conspiracy claim.
Significantly, the trial court stated in its ruling
granting the defendants' motions for sanctions:
20
The only claim Kivlighan ever advanced that
was reasonably well grounded in fact, is a
$37,500 contract claim. Instead of limiting the
action to that claim Kivlighan and her counsel
chose to advance at least three wildly
speculative claims that lacked any basis in fact.
These three claims dramatically increased the
cost and duration of the litigation. Counsel's
decision to pursue a three day jury trial in the
face of a devastating ruling, that no contract
existed between the parties, further increased
the cost to the defendants, without any possible
chance of success.
Standing alone, the Court might conclude
that any of these claims were merely a mistake or
an oversight by counsel, and might warrant only a
mild sanction. However, the combination of so
many frivolous claims, supported by such wild
speculation, so virulently prosecuted even after
any legitimate prospect of success had vanished,
convinces the Court that the claims were not an
oversight or mistake. The Court is of the firm
conviction that they were filed out of a
vindictive and malevolent desire to injure and
intimidate a business competitor.
We hold that the trial court did not abuse its discretion
in imposing sanctions in this case. Rather, the trial court
correctly applied an objective standard of reasonableness in
concluding that the facts of this case could not support a
reasonable belief that the plaintiffs' claims alleging: (1)
interference with contract expectancy; (2) conspiracy to harm
in business; and (3) defamation; along with the damages sought,
were well grounded in fact or law, as required by Code § 8.01-
271.1.
21
1. Interference with Contract Expectancy
Significantly, the trial court noted that it "imposed a
pleading admission on the Plaintiffs [just before trial] for
failing to respond to [the] Defendants' properly propounded
Fifth Affirmative Defense seeking a reply," that, "[n]either
Plaintiff ever had a contract with the owner of the Subject
Property, nor did either Plaintiff have a reasonable
contractual or business expectancy which could support a claim
of tortious interference. A reply is requested pursuant to
Virginia Rules 3:11 and 1:4(e)." The trial court's ruling
deemed the plaintiffs to have admitted the affirmative defense
they failed to reply to and excluded any reference to, or
evidence of, facts that conflicted with that admission.
Despite this damaging admission and the imposition of such "a
devastating ruling," the plaintiffs "insisted on proceeding
with a three day jury trial" on all of its claims, including
the allegation that the defendants interfered with contract
expectancy.
Specifically, the plaintiffs alleged total damages of
$168,000 (trebled to $504,000) as a result of the defendants'
interference with contract expectancy. The plaintiffs further
alleged that these damages consisted of $37,500, which
represented a five percent commission on the $750,000 Alnifaidy
purchase offer, plus $130,500, which represented a six percent
22
commission on the future sale of the property for $2.175
million as a result of improvements Alnifaidy was supposedly
going to make to the property.
However, the trial court correctly found that, "[e]ven if
Kivlighan did have a valid claim for a commission on the
[Kennedy] property," Kivlighan would have realized "at most
$37,500 from any contractual interest she acquired from the
listing agreement" – and this is only "assuming that
[Kivlighan's] pocket buyer's offer was accepted, and that she
was paid both the buyer's and seller's agent commissions on the
'unsubsidized' contract price of the highest offer her buyer
ever made." The trial court accurately noted that, "[i]n
truth, [Kivlighan's] valid expectancy is probably limited to
two-fifths of that amount [(or $15,000)], because [the listing
agreement] provided for a seller's commission of only two
percent." 2
Moreover, the plaintiffs offered no evidence that could
possibly lead the trial court to reasonably conclude that the
plaintiffs ever had a factual basis for their claim for
$130,500, which represented a six percent commission on the
2
Although the plaintiffs alleged that Donna Gavin signed
the listing agreement with NVRE for NVRE to sell the Kennedy
property in exchange for a five percent commission of the sales
price, the listing agreement signed by Donna Gavin provided for
a two percent commission to be paid to the selling broker and a
three percent commission to be paid to the buyer's agency.
23
future sale of the Kennedy property for $2.175 million as a
result of improvements Alnifaidy was going to make to the
property. The trial court noted that, although Kivlighan
claimed the loss of a commission from a second, future sale of
the Kennedy property,
based upon her contention that she was almost
certain to obtain the listing for the [Kennedy]
Property again after a new house was built[, h]er
deposition testimony established that she lacked
a factual basis to advance this theory.
Furthermore, the testimony of Mr. Alnifaidy, both
in his deposition and at trial, established that
he had never engaged her as an agent to re-sell
the [Kennedy] Property again in the future.
Indeed, [K]ivlighan later admitted at trial that
she was not engaged to re-sell the property.
Alnifaidy testified at trial that he never told Kivlighan he
would let her sell the Kennedy property for him at a later
date. The following exchange occurred during the defendants'
cross-examination of Alnifaidy at trial:
[Defendants' Counsel:] [Y]ou never had a
written agreement directly with Lauren
Kivlighan, correct?
[Alnifaidy:] No.
[Defendants' Counsel:] And [Kivlighan] was
never your real estate agent regarding any
property at any time[?]
[Alnifaidy:] No.
[Defendants' Counsel:] And you never promised
[Kivlighan] that she could be your real
estate agent[?]
[Alnifaidy:] No.
24
[Defendants' Counsel:] That is correct?
[Alnifaidy:] That's correct. Yes.
[Defendants' Counsel:] In fact, [Kivlighan]
never asked you to be your real estate
agent[?]
[Alnifaidy:] No.
Accordingly, we agree with the trial court's conclusion that,
the claims [the plaintiffs] advanced for the
"second commission" on a sale of the same
property at (1) some unknown date an indefinite
number of years in the future, by (2) a seller
whose offer to purchase the property was twice
rejected, to (3) a not even speculatively
identified purchaser for (4) precisely $2.175
million dollars, after (5) a contractor, whom the
seller who did not yet own the home had not
entered a contract with, would have torn down the
existing structure and erected a mansion based on
(6) unknown and unsolicited plans from an
unidentified architect, are, to say it as kindly
as possible, not "well grounded in fact and . . .
warranted by existing law or a good faith
argument for the extension, modification, or
reversal of existing law."
Lastly, even if the plaintiffs may have had a valid
contractual claim for a commission on the Kennedy property, it
should be noted that the plaintiffs never filed suit against
the actual owner of the Kennedy property, the Bernadette A.
Kennedy Living Trust. Rather, the plaintiffs repeatedly named
Donna Gavin personally, and not in her representative capacity
as Trustee, as a defendant in their complaint, amended
complaint, and second amended complaint. The record
25
demonstrates that they did so despite the fact that the
plaintiffs were on notice, and actually knew, at the time they
filed the second amended complaint that the Kennedy property
was owned, at all relevant times, by the Trust.
Specifically, MAI and Martins stated in their memorandum
in support of their demurrer to the second amended complaint
that "title to the [Kennedy] property was actually held by the
Bernadette A. Kennedy Trust, and not Bernadette A. Kennedy
personally." The Gavins also stated in their memorandum in
support of their demurrer to the second amended complaint that,
as "admitted in the [s]econd [a]mended [c]omplaint in ¶ 29
. . . Bernadette Kennedy (in her personal capacity) was not the
owner of the [Kennedy p]roperty, nor was . . . Donna Gavin."
The plaintiffs, themselves, stated in ¶ 29 of the second
amended complaint that "actual title to the [Kennedy p]roperty
was in the Bernadette A. Kennedy Trust, Donna M. Gavin, Co-
Trustee . . . pursuant to a deed from Bernadette A. Kennedy,
dated April 11, 2007."
2. Conspiracy to Harm in Business
Regarding the plaintiffs' claims alleging conspiracy to
harm in business, the trial court noted that, "[a]lthough [the]
Plaintiffs' pleadings never clarified whether the business
conspiracy claims were based on a common law right of action or
the statutory cause authorized by [Code] § 18.2-499, [the]
26
Plaintiffs [took] the position that the action is for statutory
conspiracy." Statutory conspiracy requires "two or more
persons [to] combine, associate, agree, mutually undertake or
concert together for the purpose of . . . willfully and
maliciously injuring another in his reputation, trade, business
or profession." Code § 18.2-499(A). Moreover, "[i]n order to
sustain a claim for this statutory business conspiracy, the
plaintiff must prove by clear and convincing evidence that the
defendants acted with legal malice, that is, proof that the
defendants acted intentionally, purposefully, and without
lawful justification, and that such actions injured the
plaintiff's business." Williams v. Dominion Tech. Partners,
L.L.C., 265 Va. 280, 290, 576 S.E.2d 752, 757 (2003).
However, there is simply no factual basis to support the
plaintiffs' allegation that David Gavin and Martins formed any
agreement to harm the plaintiffs in business during their
telephone conversations. To the contrary, both David Gavin and
Martins denied any agreement to cut Kivlighan out of the sale
of the Kennedy property, and David Gavin testified that the
calls were specifically prompted by the fact that Kivlighan
only presented the Gavins with Alnifaidy's offer and had not
presented them with the Wheelers' offer.
Additionally, the trial court correctly noted that the
"Plaintiffs' entire factual basis for pleading conspiracy
27
appears to be the fact that David Gavin and [Martins] spoke to
each other on the telephone, that David Gavin 'exhibited a
hostile and mean spirited manner,' and that [Kivlighan] was
discharged." Accordingly, there is no factual basis to support
the plaintiffs' allegation that David Gavin and Martins formed
an agreement to harm the plaintiffs and no evidence that the
defendants acted with malice. As a result, we agree with the
trial court's conclusion that "[n]o court could responsibly
permit such a claim to go to the jury without evidence, and no
attorney could responsibly plead such a claim without facts to
support it."
3. Defamation
The plaintiffs' second amended complaint alleged that
David Gavin told Martins, "I caught [Kivlighan] in a few lies,"
and the plaintiffs requested damages against David Gavin in the
amount of $1 million, plus $350,000 in punitive damages.
However, the plaintiffs offered no evidence that David Gavin
actually spoke these words.
In fact, Kivlighan testified that she did not personally
overhear any telephone conversations or any recordings of any
telephone conversations between either Martins and David Gavin
or Martins and Donna Gavin and that she "never personally heard
[David Gavin and Martins] speaking." Additionally, David Gavin
28
denied saying that he had caught Kivlighan "in a few lies," and
Martins' testimony supported Gavin.
Furthermore, the plaintiffs' repeated defamation counts
regarding the statements the Gavins allegedly made to DPOR
demonstrate clearly that each of the plaintiffs' successively
filed complaints lacked a proper basis in law and in fact.
Specifically, Walpole should have known that the statements
allegedly made by the Gavins to DPOR were privileged because
they were made in the course of a quasi-judicial proceeding.
We have previously held that "false, misleading, or
defamatory communications, even if published with malicious
intent, are not actionable if they are material to, and made in
the course of, a judicial or quasi-judicial proceeding."
Lockheed Info. Mgmt. Sys. Co. v. Maximus, Inc., 259 Va. 92,
101, 524 S.E.2d 420, 424 (2000). Significantly, "[t]his
absolute privilege has been extended to communications made in
administrative hearings so long as the 'safeguards that
surround' judicial proceedings are present." Id. (quoting
Elder v. Holland, 208 Va. 15, 22, 155 S.E.2d 369, 374 (1967)).
"Those safeguards include such things as the power to issue
subpoenas, liability for perjury, and the applicability of the
rules of evidence," all of which are present in proceedings
before DPOR, an administrative agency of the Commonwealth of
Virginia. Id. See Code §§ 54.1-300 through -311 (pertaining
29
to DPOR); Code § 2.2-4022 (providing that DPOR "may, and on
request of any party to a case shall, issue subpoenas requiring
testimony or the production of books, papers, and physical or
other evidence"); Code § 2.2-4020 (providing that presiding
officers at DPOR proceedings may "administer oaths and
affirmations [and] receive probative evidence, exclude
irrelevant, immaterial, insubstantial, privileged, or
repetitive proofs, rebuttal, or cross-examination, rule upon
offers of proof, and oversee a verbatim recording of the
evidence"); and Code § 18.2-434 (providing that "[i]f any
person to whom an oath is lawfully administered on any occasion
willfully swears falsely on such occasion . . . he is guilty of
perjury").
Nevertheless, the plaintiffs' complaint, amended
complaint, and second amended complaint, all signed by Walpole,
included three counts of defamation alleging that the Gavins,
writing to DPOR, falsely accused Kivlighan of being "an
untrustworthy agent" who "misrepresented her clients," and
turned Kennedy's property into a "pocket listing."
Inexplicably, the second amended complaint included these
defamation counts after the trial court: (1) sustained the
Gavins' demurrer to these counts in the original complaint and
allowed the plaintiffs to amend their complaint; and (2)
sustained the Gavins' demurrer and plea of absolute privilege
30
in relation to these defamation counts with prejudice, and
allowed the plaintiffs to again amend their amended complaint.
Lastly, it should be noted that the trial court concluded
that Kivlighan's "actions throughout the litigation [were]
indicative of and establish[ed] the improper purpose with which
she filed this lawsuit." In particular, the trial court
observed that Kivlighan was "nonresponsive to counsels'
questions both at her deposition . . . and when she took the
witness stand throughout this litigation[, and] she constantly
engaged in diatribes which were non-responsive and irrelevant,"
thereby demonstrating that "she filed this lawsuit out of a
vindictive and malevolent desire to injure each of the
[d]efendants and to intimidate a business competitor.
Moreover, her behavior is indicative of the lack of a factual
basis for bringing the [u]nderlying [a]ction."
The trial court also found that Kivlighan's testimony at
the hearing to determine the reasonableness of the defendants'
attorneys' fees "was evasive and misleading at times." For
example, Kivlighan first testified that she only spoke to
Walpole and one other attorney about the issues involved in the
underlying action before filing suit. Additionally, Kivlighan
testified that she did not meet with any other attorneys before
filing this suit relative to her claim.
31
Upon cross-examination, defense counsel asked Kivlighan if
she spoke to any other attorneys about the matter prior to
consulting with Walpole. Kivlighan unequivocally denied such
conversations. She was forced, however, to admit that this
assertion was inaccurate and that she spoke to at least one
other attorney about the case. The trial court noted that
Kivlighan "attempted to justify the omission by claiming that
she never attempted to retain [the other attorney]." However,
the trial court was "not impressed by the excuse and note[d]
yet another example of [Kivlighan's] lack of candor on the
witness stand."
Accordingly, we hold that the trial court did not abuse
its discretion when it imposed sanctions against NVRE,
Kivlighan, and Walpole, based upon its conclusion that the
plaintiffs' claims alleging interference with contract
expectancy, conspiracy to harm in business, and defamation
"lacked any basis in fact," and "were filed out of a vindictive
and malevolent desire to injure and intimidate a business
competitor."
D. The Imposition of Sanctions Jointly and Severally
The plaintiffs argue that the trial court erred in
imposing sanctions "jointly and severally, rather than
apportioning the sanctions among [NVRE, Kivlighan, and Walpole]
based on their respective conduct." We disagree.
32
Code § 8.01-271.1 provides that,
[i]f a pleading, motion, or other paper is signed
or made in violation of this rule, the court
. . . shall impose upon the person who signed the
paper or made the motion, a represented party, or
both, an appropriate sanction, which may include
an order to pay to the other party or parties the
amount of the reasonable expenses incurred
because of the filing of the pleading, motion, or
other paper or making of the motion, including a
reasonable attorney's fee.
(Emphasis added.) Significantly, in the circumstances of this
case – in which the parties against whom sanctions were sought
failed to provide the circuit court with evidence sufficient to
permit it to make any distinction between those parties – Code
§ 8.01-271.1 does not require a court to allocate fault or
apportion sanctions between a represented party and the party's
attorney when the statute has been violated. Instead, Code
§ 8.01-271.1 expressly provides for sanctions to be imposed
upon both a represented party and the party's attorney.
We have previously noted that, "it is apparent that the
General Assembly had the opportunity to make discretionary a
court's imposition of sanctions upon finding a statutory
violation, but elected not to do so. Instead, it used the
mandatory words 'shall impose . . . an appropriate sanction.' "
Benitez, 273 Va. at 249, 639 S.E.2d at 206 (quoting Code
§ 8.01-271.1) (emphasis in original). Significantly, in this
case, the trial court twice made written findings that NVRE,
33
Kivlighan, and their trial counsel were each culpable for
several violations of Code § 8.01-271.1. Specifically, the
trial court stated:
[T]here is substantial evidence of sanctionable
behavior on the part of both the litigants and
the lawyer. The evidence has established that
[Kivlighan] went to another lawyer, who advised
her of a reasonable remedy that she may have had
in this matter, a breach of contract action.
That was simply not enough for Plaintiffs, and
they continued to shop their case. [Walpole]
offered Plaintiffs a grab bag of remedies. He
then filed suit on behalf of Plaintiffs based
upon these remedies, with a lack of basis in law
or fact.
[Kivlighan] was not a passive participant in
this process. On the contrary, her actions
showed a clear intent to support these claims,
which were speculative at best.
The initial burden of proof rests with the party seeking
the imposition of sanctions to prove that Code § 8.01-271.1 has
been violated, and that sanctions and the amount thereof are
appropriate. Significantly, we have held that,
[a]s a general rule, confidential communications
between an attorney and his or her client made
in the course of that relationship and
concerning the subject matter of the attorney's
representation are privileged from disclosure.
The objective of the attorney-client privilege
is to encourage clients to communicate with
attorneys freely, without fearing disclosure of
those communications made in the course of
representation, thereby enabling attorneys to
provide informed and thorough legal advice.
Walton v. Mid-Atlantic Spine Specialists, P.C., 280 Va. 113,
122, 694 S.E.2d 545, 549 (2010) (citations omitted).
34
Accordingly, most of the information necessary to determine
allocation of fault between attorney and client may be hidden
by the attorney-client privilege. Consequently, when sanctions
are imposed against represented parties and their counsel, and
the sanctioned parties desire to seek allocation of fault or
the apportionment of such sanctions, they carry the burden of
providing the trial court with evidence sufficient to do so.
We are mindful of the difficulties which may arise when
courts allocate sanctions between represented parties and their
attorneys. Litigation involving the allocation of sanctions
may pit attorney against client, as each tries to prove why the
other is responsible for the sanctionable conduct. Disclosure
of otherwise-privileged information may be an issue.
To avoid such a conflict of interest, however, other
courts have suggested that, where sanctions have been imposed,
and the attorney and client disagree about who is at fault and
wish to assign blame to the other, the attorney should withdraw
as client's attorney and both should obtain their own counsel.
See e.g., Slane v. Rio Grande Water Conservation Dist., 115
F.R.D. 61, 62 (D. Colo. 1987) (explaining that the court
"recommended that [the attorney] withdraw from his
representation of [his clients and] obtain counsel for
himself"); Anschutz Petroleum Mktg. Corp. v. Saybolt & Co., 112
F.R.D. 355, 360 (S.D.N.Y. 1986) (explaining that if the
35
attorney wished to contend that their client should pay all or
part of the sanctions imposed, the attorney "will of course
need to be represented by separate counsel"); Eastway Constr.
Corp. v. City of New York, 637 F. Supp. 558, 570 (E.D.N.Y.
1986) (stating that, "[i]f attorney and client disagree about
who is at fault and point their fingers at each other, the
interests of the two are now clearly adverse. The client,
therefore, will need new counsel to represent him against his
former counsel in the proceedings to determine fault").
We agree with the trial court's conclusions that: (1) the
plaintiffs "chose to advance at least three wildly speculative
claims that lacked any basis in fact [and] dramatically
increased the cost and duration of the litigation"; and (2) the
combination of "so many frivolous claims, supported by such
wild speculation, so virulently prosecuted even after any
legitimate prospect of success had vanished [demonstrates] that
the claims . . . were filed out of a vindictive and malevolent
desire to injure and intimidate a business competitor."
The plaintiffs argue that the trial court erred by not
"apportioning the sanctions among [NVRE, Kivlighan, and
Walpole] based on their respective conduct," and that Walpole
"should be punished, not his clients," because "[p]enalizing
NVRE and Kivlighan for relying on their trial counsel does not
further the goal of . . . Code § 8.01-271.1 nor does it serve
36
the ends of justice." However, the trial court expressly found
that "the record does not conform with Plaintiffs' theory of
the case. Instead, there is substantial evidence of
sanctionable behavior on the part of both the litigants and the
lawyer."
Consequently, because both Walpole and the plaintiffs
violated Code § 8.01-271.1, and because the plaintiffs did not
provide evidence necessary to demonstrate proper allocation of
fault, we hold that the trial court did not abuse its
discretion when it imposed sanctions against NVRE, Kivlighan,
and Walpole, jointly and severally in this case.
E. The Terms and Quantum of the Sanctions
Walpole argues the trial court erred in determining the
terms and quantum of sanctions because it did not properly
consider: (1) the defendants' failure to mitigate by not filing
a motion for summary judgment; (2) the defendants' attorneys'
billing practices; (3) the punitive effect of the award; and
(4) the plaintiffs' ability to pay. We disagree.
In reviewing a trial court's award of sanctions under Code
§ 8.01-271.1, we have held that a court's imposition of
sanctions will not be reversed on appeal "unless the court
abused its discretion in 1) its decision to sanction the
litigant, or 2) in the court's choice of the particular
sanction employed." Switzer, 273 Va. at 331, 641 S.E.2d at 83.
37
It is important to state that this case is not a typical
attorneys' fees award case. It is a sanctions case wherein the
trial court has decided that a proper sanction would be based
upon attorneys' fees incurred – a remedy expressly provided in
the statute. Code § 8.01-271.1. Of course, proof of
reasonableness is required. We draw guidance from our prior
holdings regarding determination of reasonableness of
attorneys' fees. We have held that,
the fact finder must determine from the evidence
the amount of the reasonable fees under the facts
and circumstances of each particular case. The
trier of fact must weigh the testimony of
attorneys as to the value of the services, by
reference to their nature, the time occupied in
their performance, and other attending
circumstances, and by applying to it their own
experience and knowledge of the character of such
services. On appeal the trial court's
determination of the amount of the attorneys'
fees to be awarded will be set aside only upon a
finding of abuse of discretion.
Holmes v. LG Marion Corp., 258 Va. 473, 479, 521 S.E.2d 528,
533 (1999) (citations and internal quotation marks omitted).
In this case, David S. Mercer ("Mercer") testified for the
defendants as an expert in the "reasonableness [and] necessity
in attorney's fees." Specifically, Mercer testified that "the
fees are eminently reasonable and rationally related to [this]
case." Mercer further testified that he considered the "time
and effort expended by all counsel on behalf of the defense,
. . . the nature of the services rendered and the complexity of
38
those services," and "the value of the services to the
defendants and the results obtained," in reaching his opinion.
Also, Mercer testified that "the fees [in this case] were under
market from [his] experience."
James C. Brincefield, Jr. ("Brincefield") testified for
the defendants as an expert "in the field of attorney's fees,
respectively with real estate litigation." Brincefield
testified that "the fees were reasonable and necessary for the
. . . defense of this case." Brincefield further testified
that he considered "the time and effort expended by the
attorneys, the complexity of the case, the experience of the
attorneys, the reasonableness of their rates compared to the
rates of other lawyers in the area, and the subject matter of
the case" in forming his opinion.
Significantly, the plaintiffs and Walpole stipulated as to
the reasonableness of the defendants' counsel's billing rate,
and the trial court noted that "[t]he only question [that]
remain[ed] [wa]s whether the number of hours spent on the case
was reasonable." The trial court also noted that each
defendant "provided the Court with the substantial legal bills
that they incurred as a result of the litigation initiated by
Plaintiffs."
Furthermore, in reaching its decision, the trial court
considered the necessary factors, including the facts and
39
circumstances of each particular claim, the testimony of
attorneys as to the value of the services, the nature of those
services, the time occupied in their performance, and other
attending circumstances, and applied its own experience and
knowledge of the character of such services in reaching its
decision. See Holmes, 258 Va. at 479, 521 S.E.2d at 533. The
trial court ultimately determined that most of the amount
requested by the defendants was reasonable and that awards of
$113,778.06 in attorneys' fees to Martins and MAI, and
$158,318.40 in attorneys' fees to the Gavins, were reasonable.
Notably, the trial court did find that certain fees were
unreasonable, including a small amount of fees related to a
counterclaim brought by the Gavins against the plaintiffs,
certain fees connected to the number of hours counsel for the
Gavins spent in preparing jury instructions for trial, and
certain instances of duplicative and excessive billing.
We hold that the trial court did not abuse its discretion
in determining the amount of the award of sanctions,
particularly in light of the trial court's findings that: (1)
the plaintiffs and Walpole "violated [Code § 8.01-271.1] when
they filed the Underlying Action for an improper purpose and
without a proper basis in law and in fact"; and (2) "the
appropriate sanction is to hold both Mr. Walpole and his
40
clients jointly and severally liable for the reasonable
attorney's fees and costs of Defendants."
F. Walpole's Motion for a Suspending Order
Walpole argues that the trial court erred when it denied
his motion for entry of a suspending order without hearing oral
argument thereon. We disagree.
Rule 4:15(d) provides that, "[e]xcept as otherwise
provided in this subparagraph, upon request of counsel of
record for any party, or at the court's request, the court
shall hear oral argument on a motion." The rule "otherwise
provide[s]" that "argument on a motion for reconsideration
. . . shall be heard orally only at the request of the court."
Rule 4:15(d).
On July 9, 2010, NVRE, Kivlighan, and Walpole filed
motions for entry of a suspending order without requesting a
hearing on those motions, stating that "the entry of a
suspending order is necessary in order for Plaintiffs [and
Walpole] to have adequate time to brief, file and argue their
motion[s] for reconsideration and for the Court to consider and
rule upon such a motion[s]." The trial court denied both
motions on July 12, 2010.
Walpole subsequently filed a motion for reconsideration
and renewed motion for entry of suspending order on July 13,
2010, arguing that Walpole had "multiple grounds for seeking
41
reconsideration of the [trial c]ourt's rulings," and "the entry
of a suspending order is necessary in order for Walpole to have
adequate time to fully brief and argue each point of
reconsideration and for the Court to consider and rule upon
such a motion." Walpole did not request a hearing on that
motion. On July 15, 2010, the trial court denied Walpole's
motion for reconsideration and renewed motion for entry of
suspending order, stating that "Walpole has not raised any
issues not already considered in [this] matter."
Walpole also filed a request for expedited hearing on July
15, 2010, in which he requested that the trial court schedule
an expedited hearing on the previously filed motion for
reconsideration and renewed motion for entry of suspending
order "on or before July 20, 2010." The trial court did not
rule on this request before it lost jurisdiction over this suit
pursuant to Rule 1:1.
We hold that the trial court did not err in denying both
Walpole's motion for a suspending order and Walpole's renewed
motion for a suspending order without a hearing because it does
not appear that Walpole requested a hearing on either motion
before the trial court denied those motions. Additionally,
Walpole repeatedly stated that he sought the suspension in
order to file and argue a motion for reconsideration, for which
42
Rule 4:15(d) provides oral argument "only at the request of the
court." Rule 4:15(d).
III. Conclusion
We hold that the trial court did not err when it imposed
sanctions jointly and severally against NVRE, Kivlighan, and
Walpole, pursuant to Code § 8.01-271.1. Accordingly, we will
affirm the judgment of the trial court.
Record No. 101836 – Affirmed.
Record No. 101844 – Affirmed.
43