Westlake Legal Group v. Flynn , 798 S.E.2d 187 ( 2017 )

PRESENT: Lemons, C.J., Goodwyn, Powell, McClanahan, Kelsey, and McCullough, JJ., and
Russell, S.J.
WESTLAKE LEGAL GROUP,
f/k/a PLOFCHAN & ASSOCIATES
OPINION BY
v. Record No. 160013 SENIOR JUSTICE CHARLES S. RUSSELL
April 13, 2017
EILEEN FLYNN
FROM THE CIRCUIT COURT OF LOUDOUN COUNTY
Jeanette A. Irby, Judge
This is an appeal by an attorney from an award of sanctions against him arising out of his
efforts to collect fees and costs from a client. We affirm the award.
FACTS AND PROCEEDINGS
In November of 2008, Eileen Flynn (the “client”) entered into a written “representation
agreement” with Plofchan & Associates, later known as Westlake Legal Group, a law firm
practicing in Loudoun County (the “attorney”), for legal services to be rendered to her in a
domestic relations case. The agreement provided for hourly fee rates for services by lawyers and
legal assistants and for the client’s responsibility for costs and expenses. It also provided that in
the event the firm should be required to institute legal proceedings against the client for sums due
under the agreement, the firm would be its own attorney and the client would be responsible for
its fees in collection proceedings at a $400 hourly rate.
This appeal arises out of an additional provision of the agreement wherein the client
agreed that in the event she did not pay any bill from the attorney within 45 days of the billing,
her entire account would be due and accrue interest at an annual rate of 18%. Thomas K.
Plofchan, Jr. or Kathryn G. Plofchan were appointed her attorney-in-fact to confess judgment
against her in any Virginia circuit court for the entire unpaid balance due under the agreement.
The confessed-judgment clause contained the warning required by Code § 8.01-433.1.
On April 30, 2014, the attorney, then using the name Westlake Legal Group, billed the
client for $8,910.07. On June 5, 2014, the attorney billed the client for an additional $550. Both
bills were addressed to the client at an address in Purcellville, Virginia. On the next day, June 6,
2014, Thomas K. Plofchan, Jr., as attorney in fact for the client, filed a confession of judgment
against her in the clerk’s office of the Circuit Court of Loudoun County in the amount of
$9,460.07, with interest at 18% from April 30, 2014. The confessed judgment showed the
client’s address as “21804 Cresent [sic] Park Square, Broadlands, VA 20148.” The clerk entered
an order of judgment and issued a certified copy of the order for service by the sheriff on the
client in compliance with the provisions of Code § 8.01-438. On June 10, 2014, the sheriff
returned the papers to the clerk marked “not found.” The return contained the notation
“misspelled street address.” It is undisputed that no copy of the judgment was ever served on the
client.
On March 18, 2015, the attorney filed a garnishment suggestion against the client, this
time giving her address as “2221 Hunters Run Dr., Reston, VA 20191.” 1 The suggestion
claimed a debt of $11,997.97 and identified the garnishee as the client’s employer in Ashburn,
Virginia. The clerk issued a garnishment summons that was served upon both the client and her
employer.
1
Despite the differing addresses appearing in the documents contained in the record, the
attorney’s opening brief on appeal states, “The Clerk . . . had the Sheriff serve a copy of the
Garnishment Summons on Flynn at the exact address given to the Clerk to serve the confessed
judgment order.”
2
The client obtained new counsel and moved the court to enter an order declaring the
confessed judgment void nunc pro tunc because of failure to serve it on her as required by Code
§ 8.01-438. The attorney moved to suffer a voluntary nonsuit. The client moved the court for an
award of monetary sanctions in the form of recovery of her new counsel’s fees. At a hearing on
September 4, 2015, the court entered four orders: (1) granting the nonsuit, (2) quashing the
confessed judgment nunc pro tunc, (3) ordering payment to the client of all sums held by the
clerk by reason of the garnishment, and (4) pursuant to Code § 8.01-271.1, awarding sanctions in
the amount of $1,805 to be paid by the attorney to the client as reasonable expenses she incurred
by reason of the garnishment proceedings. We awarded the attorney an appeal of the order
granting sanctions.
ANALYSIS
A question of law is presented by an assertion that a court improperly asserted
jurisdiction. We review such questions de novo. Glasser & Glasser, PLC v. Jack Bays, Inc.,
285 Va. 358, 369, 741 S.E.2d 599, 604 (2013). On appellate review of the imposition of
sanctions imposed under Code § 8.01-271.1, we apply an abuse of discretion standard based
upon objective reasonableness. Shebelskie v. Brown, 287 Va. 18, 26, 752 S.E.2d 877, 881
(2014).
The attorney presented six assignments of error. We awarded this appeal as to the first
five and refused the sixth. Our holding on the first assignment of error is dispositive of the
appeal for the reasons expressed below.
The attorney’s first assignment of error is that the circuit court erred in asserting
jurisdiction after it had “already entered an order dismissing the confessed judgment action . . .
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which rendered the garnishment action moot.” 2 The attorney argues on appeal that his voluntary
nonsuit had the effect of depriving the court of jurisdiction: “Because the underlying judgment
has been dismissed, the circuit court lost jurisdiction to enter a judgment in the garnishment
action. Without jurisdiction, the court could not impose sanctions.”
We find no merit in the attorney’s argument. The court’s authority to impose sanctions
did not depend on the validity of the confessed judgment of September 4, 2015, when the
sanctions were imposed. Indeed, the confessed judgment had then been void by operation of law
for more than a year. Code § 8.01-438 provides in pertinent part:
If a judgment is confessed by an attorney-in-fact, it shall be the duty of the
clerk within ten days from the entry thereof to cause to be served upon the
judgment debtor a certified copy of the order so entered in the common-law
order book, to which order shall be appended a notice setting forth the
provisions of § 8.01-433. The officer who serves the order shall make return
thereof within ten days after service to the clerk. The clerk shall promptly file
the order with the papers in the case. The failure to serve a copy of the order
within sixty days from the date of entry thereof shall render the judgment void
as to any debtor not so served.
Confessed judgments are creatures of statute in Virginia. Because they provide for
judicial enforcement powers without the protections provided by the adversary judicial process,
and to the extent they are in derogation of the common law, 3 such statutes are strictly construed.
2
The record indicates that after the garnishment summons had been served, the client’s
new counsel appeared in the case by filing his motion to quash the confessed judgment.
Nevertheless, the attorney, without giving notice to the client or her new counsel, sent his motion
for nonsuit to the clerk accompanied by a draft order of nonsuit. The court evidently entered this
order on September 1, 2015 without endorsement by new counsel. Three days later another copy
of the nonsuit order was entered at the September 4 hearing, this time endorsed “objected to” by
new counsel.
3
In Saunders v. Lipscomb, 90 Va. 647, 652, 19 S.E.2d 450, 451 (1894), we observed that
“[j]udgments entered for the plaintiff upon the defendant’s admission of the facts and the law,
were known to the common law and exist independently of statutes . . . .” That case, and the
earlier authorities it cited, referred to fixed debts acknowledged by both creditor and debtor, not
to contracts for future services of unknown extent. A construction of the confessed judgment
statutes to include such claims would in our view be in derogation of the common law.
4
See, e.g., Wetlands Am. Trust, Inc. v. White Cloud Nine Ventures, L.P., 291 Va. 153, 165, 782
S.E.2d 131, 138 (2016) (statutes in derogation of common law are subject to strict
interpretation); Chacey v. Garvey, 291 Va. 1, 10, 781 S.E.2d 357, 361 (2015) (same); Isbell v.
Commercial Inv. Assocs., Inc., 273 Va. 605, 613, 644 S.E.2d 72, 75 (2007) (same); Lansdowne
Dev. Co., L.L.C. v. Xerox Realty Corp., 257 Va. 392, 403, 514 S.E.2d 157, 162 (1999) (same);
Chesapeake & Ohio Ry. Co. v. Kinzer, 206 Va. 175, 181, 142 S.E.2d 514, 518 (1965) (same); see
also Safrin v. Travaini Pumps USA, Inc., 269 Va. 412, 419, 611 S.E.2d 352, 356 (2005)
(observing that “[o]btaining a judgment by confession pursuant to Code § 8.01-432 is an
extraordinary remedy”). The above-quoted provisions of Code § 8.01-438 are clearly intended
to afford a debtor a limited opportunity to have a day in court to assert a defense to a creditor’s
claim. Those provisions are clearly self-executing. The confessed judgment became void sixty
days after its entry on June 5, 2014 because of failure to serve a certified copy on the client.
Accordingly, neither the nonsuit nor the order declaring the judgment void nunc pro tunc had
any effect on the court’s jurisdiction.
The court’s jurisdiction to impose sanctions stands upon a different foundation. Code
§ 8.01-271.1 provides, in pertinent part:
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.
....
If a pleading, motion or other paper is signed or made in violation of
this rule, the court, upon motion or upon its own initiative, 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
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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.
The record before the circuit court at the hearing on September 4, 2015 contained evidence of
facts clearly sufficient to establish jurisdiction to consider and award sanctions under this
section. When the attorney filed the garnishment suggestion in March 2015, the sheriff’s “not
found” return on the certified copy of the confessed judgment had been in the clerk’s records
open to public view for over nine months. A few minutes of search would have revealed to the
attorney that the judgment was void for failure to comply with Code § 8.01-438. 4 Making no
such search, he proceeded with the garnishment of the client’s wages.
The attorney’s second and third assignments of error consist of claims that, even if it had
jurisdiction, the circuit court abused its discretion in deciding to impose sanctions. We do not
reach these assignments because they were not preserved for appeal. The arguments they
contain were made for the first time in a document filed September 23, 2015 and captioned
“Plaintiff’s Written Objections to the Court’s September 4, 2015 Ruling on Defendant’s Motion
for Sanctions and Motion to Reconsider.” A motion to reconsider is insufficient to preserve an
4
We note that the confessed judgment may have been void for a more fundamental
reason. The confessed judgment was entered pursuant to Code § 8.01-432, which provides that
“[any] person being indebted to another person” may personally or by his attorney-in-fact,
confess judgment in favor of his creditor whether suit be pending or not. (Emphasis added.) The
following section provides for setting such judgments aside on “any ground that would have
been an adequate defense to an action brought on the creditor’s note, bond or other evidence of
debt upon which such judgment was confessed.” Code § 8.01-433 (emphasis added). This
language supports the conclusion that Code § 8.01-432 was intended to apply to debts that were
fixed, liquidated, and acknowledged by both debtor and creditor when executing the contract
containing the confessed judgment provision. The section would therefore not apply to a
contract for future services, when no debt yet existed and its amount could not yet be known.
See Little v. Dyer, 27 N.E. 905, 907 (Ill. 1891); cf. Safrin, 269 Va. 412, 611 S.E.2d 352 (question
not decided because barred by Rule 1:1). In the present case, that question was never presented
to the circuit court and we therefore do not decide it here.
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argument not previously presented unless the record establishes that the court had an opportunity
to rule on the motion. Brandon v. Cox, 284 Va. 251, 256, 736 S.E.2d 695, 697 (2012). The
record contains no indication that the motion was ever heard or decided, or that a hearing was
ever requested thereon. The court never entered an order modifying, suspending or vacating the
sanctions order of September 4. It therefore became final and beyond the control of the circuit
court 21 days after its entry. Rule 1:1.
The attorney’s fourth assignment of error states only that the circuit court abused its
discretion by awarding sanctions “[w]here (a) Flynn’s pleadings were not necessarily nor
reasonably grounded in law and (b) the Attorney’s Fees were unsubstantiated.” The attorney’s
argument fails to identify any legal deficiency in the client’s pleadings and we perceive none.
The record shows that the client’s new counsel presented an affidavit to the court specifying the
hours devoted to the case and his charges therefor. The court did not abuse its discretion in
basing its award of sanctions upon this affidavit. We therefore find the fourth assignment of
error to be without merit.
The argument made by the attorney’s fifth assignment of error was never presented to the
circuit court and is thus barred by Rule 5:25.
CONCLUSION
The attorney had a duty imposed upon him by Code § 8.01-271.1 not to file any pleading,
motion or other paper unless he had read it, and to the best of his knowledge, information and
belief formed after reasonable inquiry it was well grounded in fact and warranted by law. He
filed a suggestion in garnishment to divert the client’s wages in an effort to enforce a judgment
that had been void by operation of law for more than a year, a situation a reasonable inquiry
would have disclosed. His breach of that duty resulted in harm to the client consisting of
7
attorney’s fees, costs and expenses including those incurred by reason of the attorney’s meritless
appeal to this Court. We will accordingly affirm the judgment of the circuit court and remand
the case to that court with direction, after due notice and hearing, to impose such additional
sanctions as the court finds appropriate to recompense the client’s additional expenses, including
reasonable attorney’s fees, incurred by reason of this appeal.
Affirmed and remanded.
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