Estate Conflicts

Because Virginia General District Courts are not courts of record, there is little literature or case law surrounding jurisdictional issues in these Courts. Questions regarding the jurisdictions of appeals from General District Courts to Circuit Courts are sometimes difficult to answer. Most General District Court cases can be appealed to Circuit Court pursuant to Virginia Code § 16.1-106, and those appeals are heard de novo (i.e. the Circuit Court looks at the case with a clean slate as if it had never before been heard). However, where a General District Court case is dismissed on a jurisdictional motion by the Defendant, the Circuit Court may not be able to hear the appeal at all.

In 2011, the Virginia Supreme Court heard a case with the following procedural history: Fairfax County brought a case in General District Court and won against the Defendant. The Defendant appealed to the Fairfax Circuit Court, and the County then non-suited the case pursuant to Virginia Code § 8.01-380 (a non-suit is a one-time dismissal of right that allows the claimant to re-file the case at a later time). Davis v. County of Fairfax, 282 Va. 23, 710 S.E.2d 466 (2011). The County then re-filed their claim in General District Court, which ruled it did not have jurisdiction due in part to the provision in Virginia Code § 8.01-380 that states that “[a]fter a nonsuit no new proceeding on the same cause of action or against the same party shall be had in any court other than that in which the nonsuit was taken, unless that court is without jurisdiction, or not a proper venue, or other good cause is shown.” The County appealed, and the Circuit Court, hearing the matter de novo, ruled in favor of the County. The Defendant appealed all the way to the Supreme Court, asserting that the Circuit Court did not have jurisdiction to hear the second appeal because the matter was re-filed in the improper court (i.e. the County should have re-filed in the Circuit Court).

The Supreme Court agreed with the Defendant. It noted that the jurisdiction of the appellate court on appeal from the General District Court is derivative, and if the General District Court had no jurisdiction, the appellate court acquires none on appeal. This is so even though the Circuit Court would have had jurisdiction to hear the case had the case properly been filed in the Circuit Court. “[A]n appeal is a mere continuation of the original case … The want of jurisdiction of the subject matter in the court where the action was brought, continues in every court to which the action may be appealed, for the reason that it is the same action, and an appeal is authorized only where the court from which the appeal is taken, in case of the failure to appeal, would have had authority to enforce its judgment.” Davis.

Certain claims regarding trusts and estates must be brought in particular courts, and some need to be brought in Circuit Court. Thus, when questions of jurisdiction arise in General District Court, individuals with trust/estate claims should be aware of jurisdictional issues and the implication of a dismissal on jurisdictional grounds. This is especially so when questions of statutes of limitations arise. Under normal circumstances, appeals from the General District Court to the Circuit Court will not interrupt the statute of limitations of a claim because the appeal is merely a continuation of the claim and there is an unbroken chain of litigation. However, where the General District Court dismisses on jurisdictional grounds, ruling that another tribunal has jurisdiction, no appeal will lie from the General District Court, and the matter must be brought anew in the new tribunal. If the statute of limitations for any of the claims brought in General District Court expired during the interim period, those claims may be barred when filing in the new tribunal. Claimants should carefully analyze jurisdictional issues and relevant statutes of limitations when analyzing whether to bring a matter first in General District Court or in Circuit Court.

The statute of limitations for breach of fiduciary duty in Virginia is two years. Colgate v. Disthene Grp., Inc., 86 Va. Cir. 218 (Va. Cir. 2013); see Virginia Code §§ 8.01-243, 248.  However, Virginia Code § 8.01–229(D) tolls the statute of limitations where a defendant obstructs the filing of an action.  To prevail on this argument, a plaintiff must allege that the defendant “undertook an affirmative act designed or intended, directly or indirectly, to obstruct [the plaintiffs’] right to file [their] action.” Newman v. Walker, 270 Va. 291, 298, 618 S.E.2d 336 (2005). A defendant must intend to conceal the discovery of the cause of action by “trick or artifice” and must have actually concealed it from the plaintiff for the statutory tolling to apply. The concealment cannot be passive.  Thus, in an estate context, if a claimant can show that a trustee/estate administrator actively blocked a claimant’s ability to file suit, the statute of limitations may be extended.

Virginia has one other statute of limitations savings clause: Virginia Code § 8.01–249(1), which states that, in actions for fraud or mistake or to rescind a contract for undue influence, the claim accrues when the fraud, mistake, misrepresentation, deception, or undue influence is discovered or by the exercise of due diligence reasonably should have been discovered.  However, multiple courts in Virginia have ruled that this so-called discovery rule does not apply to breach of fiduciary duties because the Virginia code explicitly lays out the causes of action subject to the discovery rule, and breach of fiduciary duty is not one of those enumerated categories.  As such, the Virginia General Assembly has specifically excluded breach of fiduciary duty from the scope of the discovery rule. See Jones v. Shooshan, 855 F.Supp.2d 594, 602–603 (E.D.Va.2012); Colgate, supra.

In the context of Estate and Trust litigation, estate administrators/executors and trustees owe fiduciary duties to the estate/trust and the beneficiaries.  If a beneficiary suspects a breach of the fiduciary duty, it is imperative that the beneficiary thoroughly investigate the possible wrongdoing and bring suit within two years of the alleged act of wrongdoing.  If the beneficiary fails to do so, she could waive her ability to bring a claim for breach of fiduciary duty.