Docket – February 21, 2019

4th U.S. Circuit Court of Appeals

ACA Fin. Guar. Corp. v. City of Buena Vista, Va. (P), 4th Cir. (Quattlebaum) from WDVA at Lynchburg (Moon).

Where the City of Buena Vista, Virginia issued bonds to refinance its debt on a golf course and bond repayment depended on the City making rent payments on the golf course lease, the City’s obligation to pay that rent was not legally enforceable when the lease expressly made rent subject to the City’s annual decision to appropriate funds.

The lease agreement is dispositive on this issue, stating that the City shall pay the rent to the appellant-bank on behalf of the City’s recreational facilities authority. But if the City did not appropriate funds, which it did not, the City had no obligation to make the rent payments. A party cannot be sued for breaching an obligation it never had in the first place. To make this even more clear, the lease provides that the City’s failure to make rent payments when no appropriations are made does not constitute default. Aside from the rent payments from the City, the recreational facilities authority had no independent contractual obligation to make the bond payments.

Contrary to arguments by the bank and its insurer, the City didn’t act arbitrarily and unfairly by failing to appropriate funds when it could afford to do so. The complaint doesn’t allege as much, and in any event the lease’s “subject to appropriation” language is not ambiguous. The bank and its insurer are sophisticated commercial entities engaged in a multi-million dollar municipal finance transaction. They ask us to impose new terms to their deal that save them from the consequences of the express terms of their agreements. The court declines to do so.

The bank and its insurer also can’t recover under equitable theories. The financing documents aren’t unenforceable; the court simply holds that the express terms of the contract make repayment subject to appropriations by the City.

Thus, the complaint fails to allege claims for which relief could be granted.


United States v. Young (P), 4th Cir. (Agee) from EDVA at Alexandria (Brinkema).

The appellant’s conviction for attempting to provide material support to the Islamic State is affirmed, but his convictions for attempting to obstruct justice are vacated.

The district court’s admission of Nazi and white supremacist paraphernalia as evidence did not constitute an abuse of discretion. Even if Nazi organizations are not designated foreign terrorist organizations, a reasonable officer executing the warrant here could conclude that the Nazis’ threats and use of violence as a means of achieving their political ends meant that Nazis engaged in terroristic activity. Some of the items also illustrated a historical and present-day connection between Nazism and radical Islamism. Finally, the affidavit provided examples of the appellant’s affiliation with both Nazism and radical Islamism. Agents reasonably concluded both that Nazis qualified as a terrorist organization and that as to this particular case, the appellant’s Nazi paraphernalia was relevant to or probative of material support for a terrorist organization.

Those materials also were admissible under the applicable Rules of Evidence. The district court correctly recognized that Nazism and militant Islamism have radical, anti-Semitic viewpoints in common. Given that the items seized were probative of the appellant’s predisposition to support such viewpoints, the items were relevant to meeting the government’s burden to prove the appellant’s predisposition to support terrorist activity.

However, the evidence was insufficient to prove the nexus and foreseeability requirements of the obstruction statute.

As other circuits have concluded, an FBI investigation would not fall under § 1515(a)(1)(C), which requires proof beyond a reasonable doubt that the defendant contemplated a particular, foreseeable official proceeding, to include a proceeding before a federal judge, court, or grand jury. The appellant’s convictions do not meet this requirement.

Even if the appellant obstructed an FBI investigation, no evidence demonstrates that he was aware either that his conduct would affect a grand jury proceeding or that a grand jury or similar proceeding was impending. Based on this record, the court would be stretching the foreseeability requirement beyond its limits in concluding that the appellant’s anticipation of an FBI investigation into an acquaintance’s future trip would also reasonably herald a grand jury proceeding. To do so would be pure speculation.

Affirmed in part, vacated in part, and remanded.

Supreme Court of Virginia

Dennis v. Commonwealth (P), SCV (Mims) from CAV.

The court of appeals abused its discretion to determine whether the facts presented in an actual-innocence petition required further development. The petitioner offered several previously unknown and untested witness affidavits in support of his petition for a writ of actual innocence based on nonbiological evidence, which the Commonwealth countered with previously unknown and untested witness statements of its own. The probative value of each witness’s testimony hinged on his or her credibility. Despite the statutory mechanism for referring issues in actual innocence cases to a circuit court for factual determination, the court of appeals determined from the record alone that the evidence supporting the petition was not material and accordingly denied the petition.

This case presents one of the rare situations in which the General Assembly has charged an appellate court with engaging in factual evaluation. In Code § 19.2-327.12, the General Assembly has recognized that trial courts are best equipped to serve as fact finders by authorizing the Court of Appeals to refer the case to a circuit court for “further development of the facts.” This procedure is not mandatory, so it is up to the Court of Appeals to exercise its broad discretion in reviewing the record to determine whether the facts require further development.

The court of appeals didn’t have the benefit of a circuit court’s unique ability to see and hear the witnesses first hand and to evaluate their credibility from their appearance and demeanor while testifying. In heavily fact-dependent cases, like this one, that turn on the materiality of new evidence offered by new witnesses whose credibility is not apparent from the record, the court of appeals should err on the side of ordering a circuit court evidentiary hearing.

The court take no position on the merits of Dennis’ petition. Notwithstanding the difficulty of Dennis’ ultimate task, justice favors providing a full opportunity for factual development before the reviewing court decides his petition. A circuit court evidentiary hearing will provide him a chance to meet that burden.

Reversed and remanded.

Commonwealth v. Hall (P), SCV (Kelsey) from Montgomery (Turk).

The trial court erred in concluding that Code § 19.2-386.22(A) does not authorize the civil forfeiture of property used in a single episode of illegal drug distribution.

The undisputed facts proved that Hall’s one-time use of his pickup truck rendered it subject to civil forfeiture. Here, Hall transported himself and the drugs at issue to a parking lot, exchanging cash for the drugs, and left the scene of the crime while he was seated in his pickup truck. These facts prove by clear and convincing evidence that Hall used the pickup truck in substantial connection with the illegal distribution of a controlled substance. Because no other evidence was required, the trial court erred in declaring the vehicle not subject to forfeiture.

Reversed and remanded.

Mercer v. MacKinnon (P), SCV (McCullough) from Loudoun (Sincavage).

The circuit court properly dismissed this case for lack of personal jurisdiction. Although the court has not previously construed the phrase “persistent course of conduct,” persuasive authority from other courts sheds some light on the scope and duration of the conduct that is necessary to justify the assertion of personal jurisdiction over a litigant.

Here, the defendant’s pre-litigation contact with Virginia consisted of traveling to Virginia, having certain legal documents drawn up, and returning with her aunt to Canada. Her other contact with Virginia was for the limited purpose of litigating a single case. These contacts with Virginia didn’t exist for a long or longer than usual time or continuously, and they weren’t enduring or lingering. The contacts were instead a limited, discrete quantum of activity. Thus, the defendant’s activities were not sufficient in scope and duration to constitute a persistent course of conduct under Code § 8.01-328.1(A)(4).


Brush Arbor Home Constr. LLC v. Alexander (P), SCV (McCullough) from Loudoun (Sincavage).

The circuit court erred in denying the defendant’s motion to compel arbitration. Under the broad scope of the arbitration clause at issue, the question of which rules were required by the arbitration clause was an issue for the arbitrator to decide.

The plaintiffs argue that contractual language requiring arbitration using the Better Business Bureau’s rules is unenforceable because the Bureau hasn’t promulgated its own rules. The parties’ disagreements over the interpretation of the contract, as well as the application of the doctrine of impossibility to this article of the contract, are arbitrable as controversies or claims arising out of or relating to this contract, or the breach thereof.

The arbitrator will need to interpret the arbitration clause, determine whether the impossibility defense applies, and resolve the plaintiffs’ underlying claims as necessary.

Reversed and remanded.

Stone v. Commonwealth (P), SCV (per curiam), from CAV.

The circuit court did not err in ruling that the defendant didn’t qualify under the so-called “safety valve” provision of Code § 18.2- 248(C)2 for exemption from the three-year mandatory minimum sentences on four of the cocaine distribution offenses.

Stipulated evidence established that the defendant had been in actual or constructive possession of an AK-47 rifle at his residence during a period when four controlled drug buys between the defendant and the confidential informant took place. Absent any other evidence, the defendant plainly failed to carry his burden of establishing that he did not possess the firearm in connection with these four cocaine distribution offenses. Indeed, it was reasonable to draw the affirmative inference from the stipulated evidence that he did in fact possess the firearm for the protection of his illegal drug operation being conducted out of his residence.


Reyes v. Commonwealth (P), SCV (Mims) from CAV.

The trial court’s properly denied a continuance sought under Code § 19.2-159.1.

Under that statute, the only decision the legislature has left to a court’s discretion is what continuance, if any, is reasonable. The continuance provision serves only to protect the defendant’s existing rights, and that purpose of the statute is merely incidental to the primary, fiscal one.

Because Code § 19.2-159.1 requires a defendant who ceases to be indigent to obtain private counsel at his or her own expense whenever the indigence ends, the General Assembly provided for a continuance to allow the defendant time to choose a new attorney and time for that new attorney to prepare to provide effective assistance. But a violation of the defendant’s rights occurs only if the underlying Sixth Amendment protections are infringed. Here, the defendant didn’t assert that a new ability to retain private counsel entitled him to substitute counsel of his choice under the Sixth Amendment.


RC VA Lands LLC v. Smith (U), SCV (per curiam) from Gloucester.

In a lengthy, contentious family dispute over a will, the circuit court properly imposed sanctions against the petitioner but erred in awarding an amount in excess of attorneys’ fees actually incurred.

As the estate administrator argued below, the relevant petition for appeal under Code § 64.2-445 was frivolous, improper, and not well grounded in fact. It attempted to re-litigate the entire case that had just been litigated to finality in the circuit court, including a prayer for relief consisting of 11 requests, with the underlying goal of setting aside the original will that the circuit court had admitted to probate and reinstitution intestate distribution of the estate. The petitioner’s attacks on the circuit court’s subject-matter jurisdiction were not well-founded.

Despite the administrator’s fee affidavit for $12,480, however, the circuit court awarded $20,000 even though its order did not include language identifying sanctions beyond attorneys’ fees. Thus, this court will modify the sanctions award to $12,480 and enter final judgment for the administrator.

McDiarmid v. N. Va. Reg’l Park Auth. (U), SCV (per curiam) from Fairfax.

The circuit court properly dismissed a case arising from allegations that, in constructing a connector trail near the plaintiffs’ property, the Northern Virginia Regional Park Authority installed part of the trail on their property.

The trial record confirms that the plaintiffs failed to produce evidence of clear title or prima facie title to the disputed area of land. Therefore their claims were rightly dismissed.


Categories: Daily Dockets

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