The Virginia General Assembly passed a law in the 2019 legislative session that authorizes a successful plaintiff to receive an award of attorney’s fees in litigation under the Virginia Uniform Power of Attorney Act, where the court finds that the agent under the power of attorney breached his fiduciary duty.
The law constitutes an addition to Virginia Code Section 64.2-1614, and states as follows:
E. In a judicial proceeding under this chapter, if the court finds that the agent breached his fiduciary duty in violation of the provisions of this chapter, the court, as justice and equity may require, may award costs and expenses, including reasonable attorney fees, to any person who petitions the court for relief under subdivisions A 1 through 8, to be paid by the agent found in violation. This provision applies to a judicial proceeding concerning a power of attorney commenced on or after July 1, 2019.
This law was passed in response to a ruling by the Virginia Supreme Court in 2018: Mangrum v. Chavis, 18 Va. S. Ct. UNP 160782 (2018). In Mangrum, the Court considered a (now outdated) provision in the Virginia Uniform Power of Attorney Act that bears on attorney’s fees, and tackled the question of whether the provision permits a successful plaintiff to recover attorney’s fees against an agent under a power of attorney, or whether the provision merely provides that a trial court may deny an agent the ability to have his own attorney’s fees borne by the principal’s estate (whereby he must repay them to the principal’s estate). The Court ruled in favor of the latter interpretation (in other words, it ruled that the statute does not grant a successful plaintiff the right to recover attorney’s fees from an agent under a power of attorney).
The new law provides for a different outcome. There are some notable things about the new law. First, it requires a finding by the court that the agent “breached his fiduciary duty in violation of the provisions of this chapter” (i.e., the Virginia Uniform Power of Attorney Act). This raises an interesting question about whether a plaintiff could prove a breach of an agent’s common law fiduciary duty, and still recover attorney’s fees for the violation being of a provision of the Virginia Uniform Power of Attorney Act. Section 64.2-1619 of the Virginia Uniform Power of Attorney Act provides: “Unless displaced by a provision of this chapter, the principles of law and equity supplement this chapter.” So the issue is: can a plaintiff bootstrap a breach of a common law fiduciary duty of an agent, via this provision, to obtain an award of attorney’s fees? The issue may be largely academic because of how extensively an agent’s duties are spelled out under Section 64.2-1612.
The second notable thing is the question as to whether all of the duties of an agent under Section 64.2-1612 are in fact “fiduciary duties” for purposes of the new provision.
The third notable thing is that the standard for the award of fees (“as justice and equity may require”) is the same standard contained in the Virginia Uniform Trust Code with respect to an award of attorney’s fees. It seems likely that the law surrounding fee awards under these two statutes will develop in tandem, and litigants will be able to authoritatively cite case law surrounding a fees award under one code provision in litigation under the other code provision.
The fourth notable issue is what effect (if any) this provision will have on currently-pending litigation relating to powers of attorney. Because the new law provides that it “applies to a judicial proceeding concerning a power of attorney commenced on or after July 1, 2019”, an interesting question is whether a plaintiff with a suit currently pending can take a nonsuit and then refile after July 1, 2019, and thereby bring his lawsuit within the scope of this provision.
